Now that Adobe has finished applying the magic eraser tool to its longtime graphics rival Macromedia, it needs to enter or create new markets to continue growth beyond its dominant position in professional publishing. With the recent focus on what is admittedly the nascent e-book market, Adobe is looking at a unique window in which it could step up and become a market leader. However, it had better hurry, because Microsoft is getting tired of staring at the walls when it comes to this market.
The recent interest in e-books is due to the commercialization of electronic ink, which enables thin, crisp, paper-like monochrome (and soon color) displays that require a fraction of the power needed by LCDs. While their refresh rate makes them prohibitively slow for any kind of animation, they are the best technology for the medium developed to date and have attracted the attention of Sony and iRex, a spinoff of Philips.
Electronic ink is the kind of disruptor that has allowed opportunistic companies to seize markets. Sony, for example, capitalized on the CD-ROM with the original PlayStation and entered the digital camera market via the floppy disk with its first Mavica cameras. Apple, of course, leveraged the 1.8-inch hard drive with its first iPod.
Adobe is, in fact, already in the e-book business. but it is not providing a complete solution, which would require an end-user device. Sony's Reader will support the display of PDFs, but the electronics giant will use its own proprietary format and its own online service for distribution of content. The e-book market -- like the online music and video markets prior to the entry of Apple -- is so immature that it's just waiting for a company to step up with an integrated solution.
Sony has great distribution for its devices, but does it really understand the publishing industry? When Steve Jobs announced the addition of Disney content to the iTunes Music Store, he joked, "Hey, I know these guys." Such is the case with Adobe and major publishers, all of which are surely Adobe customers. Many magazines and books are already laid out with Adobe software; for those that are not, it's trivial to convert them into PDFs.
When compared with Sony or Apple, Adobe also doesn't have much of a consumer brand, and it's even less of a device or service brand, but these days just about anyone can outsource design to firms such as IDEO and manufacturing to companies such as Flextronics. Having a software legacy didn't prevent Microsoft from producing its own branded hardware video game console or a sophisticated subscription service to accompany it.
Xbox has been a big money loser for Microsoft to date. However, the investment required to create an e-book ecosystem would be much lower, and the competition wouldn't be as fierce or entrenched. Furthermore, much of the early market would be in professional and educational markets, where Adobe has a stronger brand. Furthermore, Adobe wouldn't be trying to unseat a dominant platform, as Microsoft continues to try to do to the PlayStation.
Indeed, Microsoft, which has dabbled in the e-book market before, is now mounting its most extensive assault to date on the Adobe empire, taking on everything from PDF to Flash with its Metro file format slated for Windows Vista and a trio of design tools. If Adobe waits until these products have a huge installed base, it could jeopardize its position of strength from which it could jump-start this market.
Once upon a time in Silicon Valley, a company that had created a breakthrough page-description language decided to enter a new market developing publishing applications. Adobe products are where many publications are produced; they could also be where they are consumed.
Ross Rubin is director of industry analysis for consumer technology at market research and analysis firm The NPD Group and a contributing editor for LAPTOP. Views expressed in Switched On are his own. Feedback is welcome at email@example.com.