Flash's challenges: Microsoft, mobile phones and markups

Blinded by the Silverlight? Not exactly, but the future's still foggy

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"I told Adobe we had to listen, because we are beholden to what technologies our clients want to use," said the executive, who declined to be identified.

Adobe isn't standing still. In the video realm, Adobe plans to match Microsoft when it releases the "Moviestar" update to Flash Player 9 in the next few weeks.

To improve Flash's DRM, Adobe is releasing a new desktop application called Adobe Media Player. The player is similar to Windows Media Player, QuickTime or Real Inc.'s RealPlayer, except that it only plays streamed or downloaded Flash videos.

The Player can also ensure that ads embedded into the beginning, middle or end of Flash video clip will always play.

Adobe claims that restricting its Media Player to playing only Flash video was a technical decision.

"Every time you add a new codec, you add more code to the player," said Kevin Lynch, Adobe's chief software architect. "We only add codecs with great care because once you do, you can never take them out."

But according to Chris Swenson, an analyst at NPD Group Inc., Adobe "is definitely not playing the neutral Switzerland. ... Web video is an up-for-grabs market, and Adobe is going for share."

On the price gap with Microsoft, Adobe said it will cut prices, but only if enough customers defect.

"If the cost of Flash Media Server comes in the way of Flash adoption, we will adjust that," said Shentanu Narayan, Adobe's president.

But "are we going to give Flash Media Server away for free? No, because we believe what we do is unique." Chizen said. Flash's market share today "is a clear indication that our pricing is competitive now."

Heading into the Lite

Besides Microsoft, Adobe's other challenge is promoting the cut-down Flash Lite player on cell phones and other handheld devices. That would enable Adobe to sell more design and content-creation tools to mobile software and video developers.

So far, more than 300 million phones have shipped with Flash Lite, Adobe said. It hopes to see 1 billion phones with Flash Lite by the year 2010.

But mobile developers still have difficulty making money with Flash, Swenson said, because of the constant turnover in cell phone models and a lack of support from phone makers.

Developers feel "there are huge roadblocks to getting their apps on phones," said Swenson. "It's a little more open than Apple's iPhone, but not much more."

Adobe's mobile business remains tiny, accounting for just $13 million in revenue for its most recent quarter, or less than 2% of Adobe's overall revenue.

Lynch acknowledged that getting Flash onto handsets "requires individual work with device makers and carriers."

"Flash runs great on higher-end phones. We want it to run on a great majority of phones," he said.

Chizen declined to comment on rumors that Apple Inc. plans to license Flash for use on its iPhone. He did say the iPhone "gets criticized" for the lack of Flash and claimed that competing handset makers are adding Flash in order to get a market advantage.

"You can probably suspect that a lot of people who are making non-PC devices are knocking on our door," he said.

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Copyright © 2007 IDG Communications, Inc.

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