Flash's challenges: Microsoft, mobile phones and markups

Adobe claims that 70 percent of Web video today is in the Flash (.flv) format.

A market up for grabs

One design firm that is a longtime 100 percent Adobe shop said it recently met with Microsoft about adding Silverlight to its repertoire.

"I told Adobe we had to listen, because we are beholden to what technologies our clients want to use," said the executive, who declined to be identified.

Adobe isn't standing still. In the video realm, Adobe plans to match Microsoft when it releases the "Moviestar" update to Flash Player 9 in the next few weeks.

To improve Flash's DRM, Adobe is releasing a new desktop application called Adobe Media Player. The player is similar to Windows Media Player, QuickTime or Real's RealPlayer, except that it only plays streamed or downloaded Flash videos.

The Player can also ensure that ads embedded into the beginning, middle or end of Flash video clip will always play.

Adobe claims that restricting its Media Player to playing only Flash video was a technical decision.

"Every time you add a new codec, you add more code to the player," said Kevin Lynch, Adobe's chief software architect. "We only add codecs with great care because once you do, you can never take them out."

But according to Chris Swenson, an analyst at NPD Group, Adobe "is definitely not playing the neutral Switzerland. ... Web video is an up-for-grabs market, and Adobe is going for share."

On the price gap with Microsoft, Adobe said it will cut prices, but only if enough customers defect.

"If the cost of Flash Media Server comes in the way of Flash adoption, we will adjust that," said Shentanu Narayan, Adobe's president.

But "are we going to give Flash Media Server away for free? No, because we believe what we do is unique." Chizen said. Flash's market share today "is a clear indication that our pricing is competitive now."

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