Analysts disagree on whether Apple can refuse Adobe's 'gift' of Flash for iPhone

Adobe's plan to develop Flash release for mobile device sets up possible rapprochement

Now that Adobe Systems Inc. is promising to bring Flash to the iPhone, one analyst is predicting that customer pressure will force Apple Inc. to agree to support the Adobe media player on its popular mobile device.

"I think Apple would look pretty bad if they say they don't want it," said Jack Gold, an independent telecommunications analyst at J. Gold Associates.

Apple CEO Steve Jobs publicly snubbed Flash earlier this month, saying that the full version is too slow for the iPhone and that the capabilities of Adobe's Flash Lite mobile player aren't up to snuff.

Michael Gartenberg, an analyst at JupiterResearch, said this week that adding Flash support to the iPhone isn't an urgent need for Apple since it already has a deal with YouTube LLC that enables iPhone users to watch videos.

And Andreas Constantinou, an analyst at London-based Vision Mobile, said via e-mail today that he thinks the iPhone user base — currently about 6 million people — is more interested in form than function. "Most Apple customers are unlikely to be interested in features (and whether the iPhone supports Flash Lite), but more on the look and feel and user interface of the iPhone," Constantinou wrote.

But Gold expects Apple's view to change now that Adobe has said it plans to develop a version of Flash for the iPhone, using the software developer's kit (SDK) that Apple announced two weeks ago for use by third-party developers.

"I think Adobe looked at [Apple] and thought, 'Apple's being a pain in the butt. They're not going to come to us. So let's be the nice guys, take the high road and build a player anyway,'" Gold said.

Even so, there are potential complications to Adobe's plan. For starters, Apple needs to approve all iPhone software before it can be distributed and sold through a new online App Store, starting in June. And Adobe said in a statement today that it needs to work with Apple "beyond and above what is available through the SDK and the current license around it" in order to provide the full capabilities of Flash on the iPhone.

Gold noted that unless Apple agrees to work closely with Adobe to optimize the upcoming Flash Lite software for the iPhone, the risk remains that the software won't display videos or run applications well enough to satisfy users. "Flash Lite could very well turn out to be a dog on the iPhone," he said. "We just don't know."

Another issue is whether Adobe still hopes to get Apple to pay a royalty fee for each copy of Flash installed on iPhones. Adobe has long charged such fees, but it has been reducing them in an attempt to spur the adoption of Flash Lite.

According to Constantinou, Adobe's official royalty fee is 25 cents per phone. But he said that as long ago as last May, Adobe indicated that the average royalty being paid was 19 cents. The royalty rate "should in practice be significantly lower" now because of Adobe's "subsidy strategy," as well as the bulk-licensing nature of recent deals that the company has signed with Microsoft Corp. and Nokia Corp.

Apple didn't immediately respond today to a request for comment on Adobe's plans. Neither did Research In Motion Ltd., which may now come under more pressure to put Flash on its BlackBerry devices. Adobe's announcement on Monday that Microsoft had licensed Flash Lite for use on Windows Mobile devices leaves BlackBerry and iPhone as the only major holdouts among smart phones.

However, there are several unofficial work-arounds (see this site and this one) that let some newer BlackBerry models do things for which Flash is normally required, such as watching YouTube videos.

Copyright © 2008 IDG Communications, Inc.

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