Will Adobe Scream 'Anti-Competitive' in the Face of a Microsoft Attack?

Predator and prey once again. You've got to love how Microsoft (MSFT) tends to see a good business, which has already been established and proven successful by another company, and then just moves in and attacks it. Some animals spend inordinate amounts of time scavenging for leaves and berries, while others just wait till those herbivores are full and then eat them. We're not against such a strategy, it is just another way of doing things and not practiced by MSFT alone either. The latest potential lamb for MSFT seems to be Adobe (ADBE).

Adobe Systems Inc. is facing increasing pressure from Microsoft Corp., which is using its deep pockets to challenge Adobe's dominance of Web design software.

Adobe's Flash software, which adds video and animation to Web sites, is at the heart of many popular Internet destinations. Retailers, media outlets and entertainment sites rely on Flash to make their sites interactive and to serve up advertisements. ...

But Microsoft has recently launched a new version of its competing Silverlight technology and has been aggressively courting the operators of popular Web sites and advertising agencies that are Adobe's core customers...

Adobe's Flash player is installed on about 98% of Internet-connected PCs, and Silverlight is only installed on about 25%, according to Adobe and Microsoft. Adobe executives said this gives the smaller company about a two-year head start. But Microsoft is "willing to invest" in order to win certain "trophy sites," said Mr. Muglia.

Best defense strategy for Adobe? Make a better product? Maybe... but probably easier to just try and get the EU's Commissioner for Competition Neelie Kroes involved. WinZip, RealPlayer, Adobe PDF Reader benefited from such a strategy, and they were far more basic programs where most might have seen their demise as inconsequential and perhaps even as part of the normal course of software development, since activities such as "listening to music" can done by pretty basic software these days.

And from our perspective, WinZip compression format and PDF document reading format seemed to be near monopolies which Neelie Kroes actually helped protect. Thus the fact that Adobe Flash is installed on 98% of PCs probably wouldn't be a concern for someone like Mrs. Kroes. We hope to keep that fact clearly in mind if and when we see attacks on MSFT's "anti-competitive" move into this space.

Comments

[Srdjan Popovic:]

From the European Commission's Directorate General for Competition perspective it doesn't matter if a program is installed on 98% or 8% of PCs, and they are right, it shouldn't matter as long as it is the customer's choice. The problem with Microsoft was that the programs were bundled with operating system and pre-installed for users, who did not have the right to choose not to install them, except by giving up on the OS or by uninstalling them later. It is about freedom of choice, not about percentages of users.

2008 Dec 17 10:22 AM

[Myles:]

This is how Microsoft has always done business, by acquisition and not innovation. Silverlight might look good at first but you have to ask yourself, "Do I trust this company with my information...?"..

If the answer is no then stick with Adobe's Flash otherwise use Microsoft Silverlight at your own peril....

2008 Dec 17 10:59 AM

[Myles:]

This is how Microsoft has always done business, by acquisition and not innovation. Silverlight might look good at first but you have to ask yourself, "Do I trust this company with my information...?"..

If the answer is no then stick with Adobe's Flash otherwise use Microsoft Silverlight at your own peril....

2008 Dec 17 11:02 AM

[Jonathan Scott:]

This is how Microsoft has always done business, by acquisition and not innovation.

In other words: "buy a business and watch the bucks come flying in the door, no ability, skill or innovation required, it's just that simple!"

I do not have an MBA, but I do not think that is how it works.

2008 Dec 17 01:37 PM

[The J-Man:]

Seriously? Apparently the author of this article may be the recipient of some of Microsoft's "investments". Microsoft might have some deep pockets, but they are still years behind Flash in terms of capabilities and will never, repeat never, win over the design folks who happen to create the content on Mac computers. Adobe's revenue (from selling the authoring tools) is safe, and the best Microsoft can do is write Silverlight off as the next version of Windows Media Player for the web.

In case you haven't noticed, Microsoft is under attack from all fronts (Mac OS, OpenOffice, Firefox, Google Search, Nintendo Wii, the list goes on and on...). Every lost battle on any of these fronts hurts MSFT on all of the others.

2008 Dec 17 01:41 PM

[OfNoConsequ...:]

On Dec 17 10:22 AM Srdjan Popovic wrote:

--> The problem with Microsoft was that the programs were bundled with operating system and pre-installed for users, who did not have the right to choose not to install them...

The interesting contrast to this thought is that for every one person who doesn't want Windows Media Player or Internet Explorer bundled with Windows, there are at least an equal amount (if not more) who DO want them bundled.

Real lost so much user base because their player was crap, pure and simple. If their product was worth installing and didn't load your computer up with all kinds of crap (they truly became the AOL of media players) then they wouldn't have lost their user base. I used to use Real Player and what they did to my computer made me swear off them forever.

Lastly, Silverlight is an "opt-In" package, you have to download it to get it. On Windows Update it's an optional package, not a critical update. In that respect it's just like Adobe Flash.

With regard to NetFlix using Silverlight for it's player, their own Customer Support people are saying "it just works". Which is what the customers actually want. Something that "just works".

2008 Dec 17 02:39 PM

[Doug Aghassi:]

How come people are starting to copy the ideas I put forth in my blog four months ago?

dougitdesign.com/blog_...

2008 Dec 17 03:19 PM

[The J-Man:]

On Dec 17 02:39 PM OfNoConsequence wrote:
>
> With regard to NetFlix using Silverlight for it's player, their own
> Customer Support people are saying "it just works". Which is what
> the customers actually want. Something that "just works".

"Just works", just like Flash video, but as a "trophy customer", Microsoft pays you to use their media player. Kind of like being paid to take experimental medicines if you ask me...Sure it's profitable, but there may be unintended side effects. Why would Netflix have to create a press release about laying people off unless it was part of a deal with MSFT? Additionally, it is most likely that they (Netflix) can lay off those people because Microsoft has a whole army of underemployed Silverlight techs willing to offer their support as part of the deal.

Bottom line: Adobe doesn't need to make deals like this. Look at MLB changing back to Flash for all you need to know about Silverlight. Or, look at some of the responses to Netflix's own blog:

blog.netflix.com/2008/...

2008 Dec 17 03:57 PM

[Vincent Fer...:]

The EU's decision media player was not about choice. It was about protecting Real Player and other redundant programs. It is MSFT's choice what they wish to put in their own product. It is then our choice to accept their product. Its that simple. We don't any inalienable right to have an operating system. MSFT creates one as they think makes the best business sense and then we decide if the pros and cons balance out to a buy decision. If MSFT does it wrong, then little by little people will get turned off and will try to find an alternative. If an enterprising business sees this, then they can create a competitor. Such as Apple's OS. It has gained ground. Or Google's challenge to MSFT as more and more computing moves online.

But to force MSFT to drop features actually reduces choice, from MSFT. Thats the key issue. Imagine if you owned a pizza restaurant and the government came in and forced you to drop pepperoni from the menu. Made you have customers go find their own "choice" of pepperoni somewhere else and then add it to your pizza. That would be a massive violation of your right to do business. Its the same thing with MSFT. We are not entitled to an operating system. And it is not MSFT's "duty" to provide one. MSFT chooses to do so, because it wants to make a profit. People then choose (or don't choose) to use windows, because it can help them do things in life.

2008 Dec 17 11:01 PM

[Vincent Fer...:]

The EU's decision media player was not about choice. It was about protecting Real Player and other redundant programs. It is MSFT's choice what they wish to put in their own product. It is then our choice to accept their product. Its that simple. We don't any inalienable right to have an operating system. MSFT creates one as they think makes the best business sense and then we decide if the pros and cons balance out to a buy decision. If MSFT does it wrong, then little by little people will get turned off and will try to find an alternative. If an enterprising business sees this, then they can create a competitor. Such as Apple's OS. It has gained ground. Or Google's challenge to MSFT as more and more computing moves online.

But to force MSFT to drop features actually reduces choice, from MSFT. Thats the key issue. Imagine if you owned a pizza restaurant and the government came in and forced you to drop pepperoni from the menu. Made you have customers go find their own "choice" of pepperoni somewhere else and then add it to your pizza. That would be a massive violation of your right to do business. Its the same thing with MSFT. We are not entitled to an operating system. And it is not MSFT's "duty" to provide one. MSFT chooses to do so, because it wants to make a profit. People then choose (or don't choose) to use windows, because it can help them do things in life.

2008 Dec 17 11:01 PM

[Srdjan Popovic:]

But the EU did not force them to drop pepperoni from the menu, only to let the customers choose if they want pepperoni or not. And it did not make the customers have to go elsewhere, they did not forbid anyone to install these programs from Microsoft. The point was to make installation of these programs optional.

When you buy a new car you can usually choose which CD player you want inside. From the EU perspective, if the car producer also makes CD players, they must allow the customers to choose if they want their player or another one, from another producer. We may like it or hate it, but that is the EU competition law.

2008 Dec 18 02:15 AM