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Adobe Wants to Come in from the Cold

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Though Adobe’s Flash player sits in nearly every browser and plays hundreds of millions of videos (and other things) per day, the company doesn’t charge for much of this incredible amount of usage. Now, leading up to the launch of its next platform, Apollo, Adobe is trying to wedge itself into a more lucrative position.

At its developers’ conference in Las Vegas last week, Adobe announced it would spend $100 million in venture funding on startups that use Adobe platforms, especially Apollo, the company’s new system for running applications written in Flash, HTML, and JavaScript from the desktop. The core idea is to marry the online and offline worlds, but the system is only out in preview now, so there aren’t exactly startups queued up for the cash.

Adobe is working hard to put itself in the middle of something. It must have thought it was already there with Flash, the ubiquitous (really ubiquitous) player it acquired along with Macromedia last year. Since then, Flash has come become a part of the biggest recent trend on the web, online video. Every new video-sharing site on the web, from YouTube on down, uses Flash, but Adobe doesn’t get to charge many of them for the service. Rather than streaming, which would require Flash servers, most of these sites opt for downloading and caching videos locally. Content owners like ABC pay to use Flash, but that’s not where all the viewers go.

Beyond video watching, on the video editing side, Adobe must also be feeling a bit left out. Most every videoblogger and amateur filmmaker we’ve heard of uses Apple products these days, with only the rare Windows videogeek using Adobe Premiere. So Adobe recently tried to buy its way into that market with last week’s purchase of Serious Magic, maker of DV Rack, ULTRA 2, Ovation, Visual Communicator and Vlog It.

We don’t mean to portray Adobe as desperate; its stock is trending upwards and its balance sheet is consistent. How is Adobe going to make money off these new efforts? While the Serious Magic products will be for sale, Apollo will be be free. The company says it will sell development tools and server software to monetize Apollo, as it does for Flash. If Adobe funding startups results in system that’s ubiquitous and makes money for the company, then $100 million will seem like money well spent.

12 Responses to “Adobe Wants to Come in from the Cold”

  1. Apollo is not a downloadable Flash application! What it is, is a framework that gives developers and companies the freedom to develop “Intranet” applications for the “Extranet” clients. EG. A client of a medical aid comany can have an Apollo based app that they distribute to their clients. This app can be a desktop app that shows them all their recent activity locally and can also update when it is online.

    That power alone is worth millions!! Once you are able to grasp the full potential of the product and what it can mean for you business you would not look any other way!

  2. The lax attitude that Adobe displayed in the months prior to and after the release of Final Cut Pro has proved to ba a considerable hurdle for Adobe to overcome (as far as video editing is concerned). Users of Premiere on the Mac have long been ambivalent towars Adobe and their seemingly lack of support and lack of innovation for the product. This gave Final Cut an opening. Macintosh users took to Final Cut like moths to a flame so much so that Adobe stoppoed offering Premiere on the Mac. Just goes to show what can happen when you don’t listen to what your user base is telling you they need.

  3. Speaking of Apple having the video tools – Anyone remember where Apple got Final Cut from? It was actually developed by Macromedia…

    Everything from marketing to packaging was finished but then Macromedia figured that they’d only do web stuff (this was long before Flash 6 and Flash Video) and sold the software to Apple who just months later launched it as the first version of Final Cut. Kinda fun to think about these days :-D

  4. Anonymous asks, “Do users really want downloadable flash applications?”

    You know, I have never heard a user specifically ask for ‘downloadable flash applications’. Fortunately, this isn’t the problem Apollo solves.

    On the other hand, many users will benefit from offline access to web content. For example, I’d love to be able to respond to gmail while on a plane.

    Many users will also appreciate webapps behaving more like installed apps. To upload photos to Flickr today, either I use a clunky web-based form or download their Uploadr tool. I’d rather launch an Apollo app to browse photos on my hard drive, decide which to upload for others to access, and have a seemless experience organizing and viewing photos whether online or off. Takes Flickr to a new level, where it can compete favorably with desktop apps for photo organization while still offering the photo sharing benefits of being online.

  5. anonymous

    Beyond the wow factor, do users really want downloadable flash applications? As for developers, haven’t we seen the free tools, open standards, bait and hook before? Adobe has an uphill battle against truly free and open source web 2.0 technologies.

  6. We’ve started development on a couple apps we plan to port to Apollo as soon as Adobe provides us the APIs. There’s a definite ‘wow’ factor moving from Ajax/Flash to Apollo in terms of what a user is able to accomplish. Definitely worth watching.

  7. I think there are two ways that adobe could make money:

    One, Adobe plans to show contextual ads inside Adobe digital editions which is like a trimmed down version of Adobe reader. Second, Adobe could have big licensing deals with mobile companies for their Flash lite technology.

    Though I am not sure how Ovation will fit in Adobe’s portfolio.

  8. Liz,

    I wonder if Adobe feel the pressure of open source initiatives like the Red5 server ( might also eat into their share of future revenues.

    If Red5 can be sustained as open source it will attract a lot more early developers (such as those who would normally launch services using the LAMP stack). Adobe need to give tools away to attract these developers, make it low cost for them to launch a service and then add value once the service is established.

    Restrictive server licences (read high cost) will not compete with reliable open source tools.

    Once Red5 has established its final releases, I would think we will see more start up scenarios coming from this area.