Adobe Strikes Back

By Anders Bylund
January 6, 2009 | Comments (2)

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We know that Microsoft (Nasdaq: MSFT) wants to pull the rug out from under Adobe Systems (Nasdaq: ADBE). The Flash platform commands a unique and very visible niche of the software market, and Silverlight is designed to steal that market as quickly as possible.

But Adobe is not sitting still, milking its dominant position. The company is fighting back by spreading Flash to tons of new hardware platforms. Wherever you look for a netbook computer this year, Adobe hopes that the media presentation and general widgetry on it will depend on Flash technology. Separate announcements from chip designers Sigma Designs (Nasdaq: SIGM), Broadcom (Nasdaq: BRCM), Freescale (NYSE: FSL), and Intel (Nasdaq: INTC) tout Flash support headed for their latest platforms such as set-top boxes, mobile phones, and netbooks in the near future.

That kind of support across different hardware platforms is something that Silverlight can't equally match today. Given Adobe's strong head start, it's likely that Mr. Softy will play catch-up here for a long time. Before this becomes a case of the Matthew Principle -- "For whoever has, to him more shall be given, and he will have an abundance; but whoever does not have, even what he has shall be taken away from him," Matthew 13:12 -- Redmond might need to reconsider this Sisyphean project, regardless of the occasional high-profile client win.

If the Yahoo! (Nasdaq: YHOO) love story teaches us anything though, it is that Microsoft doesn't give up that easily. Expect Redmond to keep up the good fight for years to come, even if the chances of victory seem slim to nonexistent. But if you want to invest in digital entertainment today, Adobe with large chunks of the hardware industry at its back sure looks like a good bet.

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Sigma Designs is a Motley Fool Hidden Gems Pay Dirt recommendation and an official Rule Breaker. Microsoft and Intel are Motley Fool Inside Value picks. The Fool owns shares and covered calls of Intel. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.

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  • Report this Comment On January 07, 2009, at 11:07 AM, SpaceAce1974 wrote:

    Love the vote of Flash confidence but how can Anders write this stuff. Just one month ago he wrote Adobe is running scared? Where is the value if he can't make up his mind regarding Adobe and Flash.

    http://www.fool.com/investing/general/2008/12/08/adobe-is-ru...

  • Report this Comment On January 07, 2009, at 4:11 PM, c00ljames wrote:

    Is Anders the tech reporter for TMF? If so, he's about 2 months behind the curve on this whole market.

    Silverlight vs Adobe? That article was sad. Suffice it to say it was the worst researched article I've seen on this site. Hundreds of blogs staffed by teenagers had more insightful commentary on the topic, regardless of their choice of protagonist.

    The article above shares a similar stench. What's given as cutting edge, market-driving news doesn't even qualify as a decent summary of Adobe's press releases since November of last year.

    Anders:

    If your editor is saying "Write something about Adobe before lunch", push back and tell him/her that you need more time to catch up from the last time you did a lick of research on the software market. The Olympics were last summer, and your December 08 'running scared' article gave a window into your sad base of knowledge. You completely missed the number of big media companies who tried and revoked their Silverlight strategy. Regarding the topic of this article, Adobe announced a number of fully-baked, cleverly nicknamed initiatives to instantiate their plans, and they're all old news in Jan 09.

    In summary: "boo".

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