Did Steve Jobs Beat Adobe?
In a war over Web standards, Adobe Systems Inc. (NASDAQ:ADBE) has given in to Apple (NASDAQ:AAPL) and stopped development of its Flash Player for mobile browsers. This means Web developers currently using Flash tools will most likely start using HTML5 technology. This is great news for iPhone and iPad users who currently have trouble accessing sites built with Flash.
Adobe (NASDAQ:ADBE) is scaling back development of some products, like LiveCycle, and is leaning toward leasing software with the cloud and will also be restructuring and laying off around 7 percent of their workers. Projections by Adobe (NASDAQ:ADBE) are that revenue growth will slow below Wall Street projections to around 4-6 percent next year, but they also state the company should return to current levels by 2013.
“Shifting from a license model to a recurring model is hard. Longer-term, Adobe (NASDAQ:ADBE) will be a stronger company. However, in the meantime we believe that the shares will languish until revenue growth is evident,” said Brigantine Advisors analyst Barbara Coffey.
Analyists think Adobe’s surrender might be a setback for Apple (NASDAQ:AAPL) competitors who focus on Flash such as Asustek Computer Inc, Google Inc (NASDAQ:GOOG), HTC Corp, Motorola Mobility Holdings Inc (NYSE:MMI), Research in Motion Ltd (NASDAQ:RIMM) and Samsung Electronics.
“It certainly changes the position a little bit for those who said that iOS products such as iPhone and iPad were disadvantaged for not supporting flash,” said Michael Gartenberg, an analyst with Gartner.
Ironically, Adobe has actually been a long time investor in HTML5. They previously worked with magazine publisher Conde Nast developing software that allows for the use of HTML5 technology to publish digital editions of magazines, including the New Yorker and Wired. Adobe (NASDAQ:ADBE) incorporated HTML5 into its well-liked Illustrator and Dreamweaver software programs as well. It also highlighted an HTML5 program named Edge for creating animated Web content. The company says it is planning to use HTML5 technology in all of its products in the future.
David Wadhwani, head of Adobe’s (NASDAQ:ADBE) digital media business unit, said the company was in “close collaboration” with Apple (NASDAQ:AAPL) as well as Google (NASDAQ:GOOG), Microsoft Corp (NASDAQ:MSFT) and others as it developed these new products. “There is rocket science in this,” he said. “There is enough innovation here to last a decade.” He also said they would still use Flash technology for mobile applications that would run on devices through its Adobe AIR platform and invest in technology to produce Flash applications for desktop computers.