Adobe Strives to Crack the Smart-Phone Market
Kevin Lynch, Adobe's chief technology officer, shows Flash on phones at a developer conference in November.
By BEN WORTHEN
Adobe Systems Inc., which makes the Flash software widely used on computers to play Internet videos, is trying to crack a new market: smart phones.
But the software company's year-plus effort to expand beyond the PC has been hampered by shifting strategies within Adobe and an inability to offer a version of Flash that runs on the iPhone and BlackBerry devices.
Now, the San Jose, Calif., company is reengineering its software so Flash-based games and videos can run on different handsets as well as PCs without being modified. As part of the effort, Adobe has struck alliances with chip designers and phone makers and offered millions of dollars to developers willing to write programs for mobile devices that use its software.
"Smart phones are where the game is now," says Kevin Lynch, Adobe's chief technology officer. "Our chips are on the table. We've made our bets."
But while Adobe later this year will release a trial version of Flash for phones running operating systems made by Palm Inc., Google Inc. and Nokia Corp., there is still no timetable for a version of Flash that will run on Apple Inc.'s iPhone or Research In Motion Ltd.'s BlackBerry.
Mr. Lynch says Adobe has engineering teams dedicated to working on each major smart phone. In the case of the iPhone, the hold up isn't entirely technical. "We need to have Apple's agreement before we can do it," he says. Apple and RIM declined to comment.
Like Adobe, many other companies that had focused on the PC market are now realizing they also need to jump into the fast-growing smart-phone market. Among those adopting this new religion are game companies such as Electronic Arts Inc. and business software makers such as Salesforce.com Inc.
The shift comes as smart phones, which are powerful enough to run programs, are proliferating, just as the PC market has weakened. Smart-phone sales jumped 13% to 36 million units in the first quarter , while PC shipments fell 6.5% to 67 million, according to research company Gartner.
Adobe has much riding on the effort. It has been hit hard by the recession, with sales dropping 12% in the first quarter. Flash, which is embedded in many of Adobe's products, is a key revenue generator for the company.
Creating a single version of Flash that works on PCs and smart phones is an about face for Adobe. For years, the company pushed separate software called Flash Lite for phones. That business brought in $115 million in fiscal 2008, more than double the previous year, but remains just a fraction of Adobe's $3.6 billion in annual sales.
Within Adobe, getting Flash on cellphones competed with another effort to develop a high-definition version of Flash, among other projects. Through much of 2008, members of Adobe's mobile group sat on different floors in the company's San Francisco office from members of the team responsible for Flash. Adobe only formally combined the Flash and mobile groups in December as part of a broader cost-cutting effort.
Meanwhile, longtime ally Apple has balked at putting Flash on its devices. Apple Chief Executive Steve Jobs last year said Flash is too slow to run on the iPhone for technical reasons and Flash Lite doesn't run enough programs to be included. Adobe CEO Shantanu Narayen says customers have been pressing his company to make Flash work on the iPhone.
Analysts say one reason for Apple's reluctance to embrace Flash is that phone makers differentiate themselves based on the software that runs on their devices. If a game is only available on the iPhone, for instance, that might convince someone to buy the device. As a result, it may be in the interests of Apple and RIM to keep Flash off their gadgets.
In May 2008, Adobe launched the Open Screen Project, a group of more than 25 companies including handset makers and content creators, which committed to making Flash run on different devices.
In February, Adobe and Nokia also created a $10 million fund for developers who create applications for mobile devices using Flash. So far, five grants have been awarded, says Matt Collins, a Nokia marketing director.
via: THE WALL STREET JOURNAL