Saturday, June 12, 2010

The Flash Debate: How Adobe Got It Wrong

There are few companies I've followed as closely over the past 20 years as Adobe Systems. The company's PostScript technology was instrumental in the success of the Macintosh and assisted in bringing commercial publishing power to the desktop computer. Adobe Photoshop and the creative products that now comprise the Creative Suite series of products brought the company into another era of success.
I've followed Adobe Systems from the time fonts were the company's revenue mainstay through the acquisitions of Aldus and Macromedia and its position today as a world leader in desktop creative software solutions. Like many Apple enthusiasts, I have a sentimental attachment for the company that stems from the early days of the Macintosh when the Apple and Adobe worked hand-in-hand to deliver compelling and even revolutionary desktop publishing solutions. 
Like all giant Silicon Valley tech companies Adobe Systems has made its share of mistakes not the least of which was the essential abandonment of the Macintosh platform starting in the mid 90's as the company's preeminent platform for commercial product development. Apple didn't chose to compete with Adobe Systems through the development and release of Final Cut Pro and Aperture because Adobe Systems remained attuned and attentive to Apple's software needs for the Macintosh platform. This lack of attention to Apple and Apple's emerging mobile platform has lead to the latest public spat between the two companies over Adobe Flash.
Adobe's latest strategic error in what has now become a contentious relationship between the two former partners occurred with Adobe's decision not to handle the Flash dispute with Apple in a quiet way. From the start, the battle over Flash is one Adobe Systems can not win. Adobe's highly public expressions of vitriol over Apple's decision to exclude Flash from its iOS platform has only heightened awareness of Adobe's product model vulnerabilities. 
Adobe makes desktop products. Flash was a product add-on from the Macromedia acquisition and found a place as a stopgap solution for the playback of video on the Web. Flash as a mobile playback solution is not how the product was designed and it's a awkward transitional solution as the world's consumers migrate to handheld computing products. It's not as if Adobe hadn't been advised by Apple its product wasn't suitable for the way Apple was optimizing its mobile hardware products. Apple's decisions concerning Flash should not have drawn a response as if Apple's actions were somehow a surprise. It wasn't until the release of the Apple iPad that Adobe chose to raise a public fuss.
Perhaps one of Adobe's biggest mistakes in the Flash feud with Apple is pretending Flash represents a platform that should be a standard impervious to competitive forces and impenetrable in a market moving quickly to ultra-mobile hardware devices. Oddly, it's Adobe's responses to Apple in the Flash feud that has made HMTL5 and its development more commonly known.
Apple will not change its position regarding Flash no matter Adobe's grandstanding and claims Apple is working against "open" standards. In my view Adobe's problems with Apple aren't about Apple and aren't about the absence of Flash operability on iOS devices. The problems are all about Adobe and how the company intends to rework its product model in a dynamic marketplace for computing devices.
When I encounter someone who has recently purchased a new smartphone and the person trumpets the fact the phone can play Flash videos as a deciding factor in the purchase decision I consider it an obvious indication how little the person understands smartphones including the one they just purchased. 
Flash is a transitional stopgap no matter Adobe's wishful thinking. Adobe now trades at a p/e multiple of a bit over 47 times trailing 12-month earnings. The release of CS5 is expected to boost revenue and earnings over the next few quarters. But what will drive Adobe's continuing growth? I suspect the company will quietly embrace the emerging HTML5 standard and move beyond its seeming intransigence on Flash to better optimize the product for mobile devices. But the bigger question is how Adobe intends to transform its product lines to embrace the move away from desktop computing and the PC-centric paradigm the company helped to create. That has nothing to do with Apple and ultimately very little to do with Flash. 

Robert Paul Leitao

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