Adobe Systems Incorporated (MM) (NASDAQ:ADBE)
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5 Years : From May 2008 to May 2013
Flash is important to Adobe Systems Inc. (ADBE) but isn't critical to the company's survival, Adobe Co-Chairman and Co-Founder Chuck Geschke said.
The technology, which Adobe got when it acquired Macromedia Inc. for $3.4 billion in 2005, has been at the heart of a rancorous and public spat between Adobe and Apple Inc. (AAPL) that now includes three founders of the two companies.
Apple Co-Founder and Chief Executive Steve Jobs recently said Adobe's Flash video player isn't suitable for mobile devices, as the company banned Flash from Apple products such as the iPhone and the new iPad. Adobe has responded that Apple is promoting a closed system that threatens creativity.
Today, Adobe launched a new ad campaign with full-page ads for Flash in several major newspapers. At the same time, it created a section on its website devoted to Flash and openness on the Internet. An essay on the site from Geschke and co-founder John Warnock said that "if companies put content and applications behind walls their success will come at the expense of the very creativity and innovation that has made the Internet a revolutionary force."
Adobe doesn't break out how much company revenue comes from Flash, but most of its Flash revenue is from developers who buy tools for developing Flash content, Geschke said in an interview with Dow Jones. Tools for creating Flash content are sold on their own, or as part of the Creative Suite software known as CS5. The suite includes products such as Photoshop, Illustrator and InDesign.
Responding to criticism of Flash's tendency to crash, Geschke said that the next version of Flash will be out "soon" and will be "dramatically faster and more stable."
Estimates indicate that somewhere between 66% and 75% of Web-based video is viewed via the Flash Player, including videos encoded in codes such as H.264 and VP6.
The irony of the squabble between the two companies, whose fortunes were very much aligned in the 1980s, isn't lost on Geschke.
Jobs originally tried to buy Adobe in the early 1980s, Geschke said, but Adobe eventually settled on a deal by which Apple bought 19% of the company and built its Postscript technology into Apple's first printer, the LaserWriter. That printer, said Geschke, "was critical to the early success of their company."
Then, Adobe, Apple and Aldus--the company that created the PageMaker page layout application--partnered together in 1985 to promote the idea of desktop publishing. That notion made fortunes for all of the company's founders at a time when Geschke said "Apple wasn't doing that well" in the midst of strong competition from IBM.
"Desktop publishing turned their business around," he said. "It made a tremendous change in Apple's fortunes in the mid-80s. The relationship has been important for both companies."
But the relationship began to show signs of strain after Jobs was forced out of Apple and the new management in 1989 said it would replace Postscript in its printers with TrueType, a competing technology from Microsoft Corp. (MSFT)
Adobe stock was down slightly today at $34.78.
- By Jeanette Borzo, Dow Jones Newswires; 415 765 8230; firstname.lastname@example.org