The looming Microsoft battle with Adobe (It’s not just a web thing)

Longtime friends and business partners, Adobe and Microsoft are set to fall out of love, as the WSJ reports today. The WSJ focuses on a likely clash between the two companies over digital media (Adobe Media Player, duking it out with Microsoft’s Windows Media Player) and web publishing (Microsoft’s new Silverlight, which will compete with Adobe’s near ubiquitous Flash technology).

The future of the web and what we see on it, carved up between the industry’s top desktop software companies.

“The future battle lines are going to be drawn between Microsoft and Adobe in this space,” says Chris Swenson, an analyst at NPD Group, a research firm….

Adobe’s new software gives the company a chance to bring in new revenue. While computer users can download Adobe’s Flash Player free of charge, Adobe sells the software used to build the online services and software that are based on Flash.

Microsoft’s move is a new chapter in a history of defending the crown jewels: the operating systems that have been the foundations for other programs to run on. Windows has long been Microsoft’s largest source of revenue and profit and the cornerstone of most of its other software. Over the years, when any company challenged Microsoft’s operating system, the software giant threw its full weight into fending off the interloper.

This point is apparently lost on Novell, which believes that Microsoft earnestly wants to sell SUSE Linux. Baffling, but….

Both Adobe and Microsoft have an uphill slog going into new territory, but I think in these two respective battles Microsoft has the tougher slog, as InformationWeek reports:

Microsoft has a long way to go in convincing developers and users of the need for an alternative to Flash, which has a place on 98% of browsers. Microsoft promises eventual support for managed code, including C# and Visual Basic .Net, but that capability is lacking in the beta version. Nor does Silverlight support 3-D graphics, despite the fact that the related Windows Presentation Foundation is the graphical component of Microsoft’s .Net 3.0 development framework.

Lee Brimelow, senior design technologist at consulting firm Frog Design, says his initial reaction is that “Flash is way more powerful” than Silverlight. The one thing that could set Silverlight apart, Brimelow says, is its ability to play video. Silverlight comes with a standard video codec that’s also faster than Flash; both of those factors will make for cheaper streaming than Flash, Microsoft claims.

In all this, it’s strange to me that the WSJ and others are fixating on the web battle between Adobe and Microsoft but have completely failed to see an equally serious battle: file formats, i.e., PDF versus XLS, DOC, and PPT.

In this latter fight, Sharepoint is Adobe’s biggest threat, because it extends the file format lock-in to the network. It’s not just tied to file formats, either. The more content Microsoft can get into Sharepoint, the less Adobe (or anyone else) can do with it. At that point, it just doesn’t matter how much of a standard PDF becomes, if Microsoft can succeed in holing the content up in a proprietary repository. Game over. For Adobe and for anyone else that hopes to compete.

At any rate, it will be fascinating to see how this battle plays out. Adobe has done exceptionally well blending the desktop with the ‘Net, and has shown real intelligence in figuring out ways to proliferate/standardize its technology through open source-esque distribution strategies. Indeed, with this in mind, there are some key areas that a little open source could help Adobe to solidify its position against Microsoft and make it, not Microsoft, king of the “Net-top,” this innovative blend of desktop software and Internet-based services.