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Adobe Systems may have a clear lead in the market for so-called creative software: things like photo editing, Web page design and layout tools. But the world has changed. People no longer assume that packaged software from big companies is best, and an ever-growing number of applications are available for free.
CEO Bruce Chizen says it's Adobe's game to lose. A new version of the company's Creative Suite bundle is coming later this month. But Chizen sees Google and a handful of other competitors zeroing in on Adobe's key markets by offering free Web-based tools. That's why the company has plans to launch a free, online version of its flagship Photoshop application in the next few months.
Q: When you were asked last year why Adobe did the Macromedia deal, you said: Flash. A one-word answer.
Chizen: Yeah, I got a lot of other things along with that. I got great, innovative, aggressive people that helped instill Adobe with more of that. We got a great video platform, which quite frankly was a surprise. I didn't really understand the power of Flash video until after the fact. The Flash media server was a big surprise. Having a Web layout tool that was market-leading, with Dreamweaver, was a big win for us. We tried for years with Go Live. As good of a product as it was, we could never be core to the Web, we were always peripheral.
Chizen: Yes, in the next version. You will be able to double-click on an image in Dreamweaver and launch Photoshop, make the changes in Photoshop and the image automatically changes in Dreamweaver. We will continue to draw the connection from creative tools to Flex.
As far as other things from the Macromedia deal, we got Flex and ColdFusion as a way to add value to business processes, and we got a bigger play in mobile. We knew that the way people would access information was going to become more non-PC than PC, but the Adobe Reader was not the right fit. We had a couple of false starts but couldn't really get there. And Flash Lite was taking off. The fact that device makers were paying for it, as opposed to us forcing them to install it, is pleasing. We're on 200 million non-PC devices. Every Sony Playstation 3 has Flash Lite.Do you compete with Microsoft in the electronic forms area, with Office 2007?
Chizen: Yes. We compete with Microsoft, but we don't bump into them that much. Most of our users are in financial services, manufacturing, health, pharmaceuticals and government, where they have to go outside the firewall and they need the reliability of Adobe Reader and that's where Microsoft falls apart. You can't get the reliability and insist that everyone use Windows XP, or XP Service Pack 2, or Vista. Our customers want their users to have access to their forms and business processes regardless of operating system, regardless of browser and they need it done in a reliable way, which limits the use of HTML. So it's really a unique value proposition that we have. If you go to Ameriprise or Fidelity, they use Adobe Flex and Live Cycle. Even people like Yahoo, if you look at Yahoo Maps, that's all Flex/Flash. Even Google Finance is Flash.
We do something that is truly unique. There's a lot of users who don't need us. But where we do something unique, it truly is unique and it's hard to do it any other way. The only company that can really do stuff that imitates what we do is Google, just because of the pure talent and resources they have.I was surprised to hear you mention Google as the only company that can do some of what you do. Can you explain a bit more about what you mean?
Chizen: When I say some of what we do, they can create Web sites that are compelling without using our tools in part because they can afford to do it, and have the knowledge to do a lot of hand-coding, because they have such a breadth and wealth and depth of talent that others can't afford.
But wouldn't Microsoft fall into that category?
Chizen: If you look at their Web site, and they use a lot of Flash, they use a lot of PDF. The fact they are not even using a lot of their own technologies suggests to me that, while they can produce great tools, their ability to use their tools to express what they do on their own Web site is not as great as for someone like Google.
What about Google competing with you on some of your hosted applications?
Chizen: If we don't get there, they will. Shame on us if we don't get there before them. People come to us for those tasks, they rely on us, they expect us. If they want to have those solutions delivered to them through the Web, through a business model where they don't have to pay, we had better do that or we are going to lose that customer.
It's no different than when we introduced Photoshop Elements a few years ago. There's the Photoshop customer, (but) everyone was concerned about what we were going to do for the low-end customer. Well, if we didn't have an offering today, the world would be a lot different. The onus is on us to deliver a solution. If we don't, Google will. The way I would describe it is, I'm concerned about Adobe getting there in time to address our users' requirements. So Google could get there first, but there are others. There will be a market opportunity and there's a number of people who could get there. I better get there, Adobe better get there, before anybody else gets there, with Google being a likely, but not the only, candidate.
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