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Memo to Steve Jobs: Flash Isn't Going Anywhere

http://www.fool.com/investing/general/2010/03/16/memo-to-steve-jobs-flash-isnt-going-anywhere.aspx

Eric Jhonsa
March 16, 2010

In the hype-filled world of tech media coverage, the last few months haven't been kind to Adobe's (Nasdaq: ADBE  ) dominant Flash technology. More than a few pundits have forecasted the technology's demise at the hands of the developing HTML5 standard, which, among other things, allows supporting web browsers to display interactive content such as videos and games without the need for a separate plug-in such as Flash. And to make matters worse, Steve Jobs not only refused to support Flash in Apple's (Nasdaq: AAPL  ) iPad, but also cited his belief in HTML5's future dominance as a big reason why.

I think that HTML5 does amount to a real threat to Adobe over the long-term. But all the same, I think anyone expecting it to do serious damage to Flash's market position over the next couple of years is in for a serious disappointment, for three reasons:

  1. HTML5 is a work in progress. HTML5 represents a complex new technology standard, and history shows that it always takes a long time to develop such standards... and then some additional time to work out all of their bugs so that users have a quality experience. The many years that it took for technologies such as Java and XML to be fully embraced by developers, in spite of their clear benefits, bears this out. While the first draft of the HTML5 standard was completed in early 2008, the standards body isn't expected to give it a full stamp of approval for web use until 2012. Until then, expect the technology to be implemented piecemeal.
  2. Licensing issues remain thorny. YouTube, with much fanfare, recently began giving users the option to view some clips in HTML5 instead of Flash. But not only does this feature have some big limitations – videos with embedded ads aren't supported, for example – and the only browsers it supports are Apple's Safari and Google (Nasdaq: GOOG  ) Chrome. Why? Because they're the only browsers to have licensed the encoding technology that YouTube's HTML5 clips are based on. If you're using Firefox, or Internet Explorer without a Chrome plug-in installed, you're out of luck. Throw in Mozilla's refusal to license the encoding technology used in YouTube's HTML5 clips for its popular Firefox browser, apparently based on principle, and this problem could take a while to resolve itself.
  3. Old browsers die hard. Even once the HTML5 standardization and licensing issues have been settled, I wouldn't expect web developers to abandon Flash overnight. There are just going to be far too many users out there running older web browsers that don't support HTML5. If you want proof, take a look at the browser market share data provided by Net Applications for the past month. Of the 61.6% of the market assigned to Internet Explorer, only about 26% came from versions of Internet Explorer 8, which was officially released a year ago, and partially supports HTML5. Another 14% came from versions of IE 7.0, which was released in 2006, and a stunning 21% came from versions of IE 6.0, which was released all the way back in 2001. Expect those last two groups of users to take their sweet old time in becoming "ready" for HTML5.

Microsoft comes around ... and so might Apple
While HTML5 continues working itself into game shape, Flash continues to clean up against its present-day competition. NewTeeVee.com reported that News Corp.'s (Nasdaq: NWS