For Adobe, There Is A Lot More At Stake Than Apple Devices, Here’s The Bigger Story

I don't know about anyone else, but frankly I am getting sick and tired of all the whining that's taking place when it comes to the Adobe and Apple saga. Both companies need to stop making this an issue in the media, stop trying to pitch bloggers on whos side they should take and instead should focus their efforts on their core business.

For starters, don't let the discussion get sidetracked by those who want to imply that Apple is supporting HTML5 out of the goodness of their heart or because they want to support some kind of "open standards". Apple's decision not to support Flash on their devices is purely a business decision and one they have the right to make. Anyone who tries to imply that Apple is being the "Robin Hood" of the industry and is trying to do away with proprietary technology for the benefit of us all is simply wrong.

While Adobe's not happy with Apple's decision, Adobe needs to stop whining about it and adapt their business due to changes that happen in the market. Industries do not sit still, business evolves and any good company evolves with it. While Apple threw Adobe a curve ball, Adobe should stop complaining about the pitch and change their business so they can hit what's thrown to them. And I don't mean by filing a lawsuit which would only help Apple and hurt Adobe.

Adobe has allowed Apple to get under their skin and as a result, given Apple a lot of press. Adobe continues to blog about Apple, mention Apple and complain about Apple. That should stop immediately. Make your point known, outline the facts and then focus on how your business can overcome the problem. Adobe could have diffused the Apple situation but instead, by their actions, have only thrown fuel on the fire. That all plays into Apple's hands, giving them more exposure for a device, the iPad, that has sold half a million units.

While Flash was never supported on the iPhone, we didn't see much of a stink made about it until the iPad came out. Why is Adobe so concerned with the iPad? Even if the device sells 10M units in the next two years, it's not even 1% of all the connected devices on the web. Not having Flash working on the iPad is not that big of a deal for Adobe. It's a much larger problem for Apple since as a consumer, the browsing experience I get on the iPad is terrible. I bought the device from Apple, so they get the blame for that, not Adobe. Now I do realize that the iPhone has a large footprint and unlike the iPad, has real adoption. But that one device alone will not make or break Adobe's business.

The real story here is the ecosystem. Apple does not have one and Adobe does. That's where Adobe has the upper hand and needs to change their way of thinking to combat Apple. For any content that is created and delivered to the iPad, Apple gets nothing in the way of revenue from that ecosystem. Most content owners don't use any kind of Apple software to encode video for the iPad and none of the CDNs that deliver content to the iPad use any kind of server software from Apple. Apple gets no revenue from the iPad ecosystem other than apps specifically written for the platform.

Adobe on the other hand has an entire ecosystem of software for both the encoding and distribution of video on the web, not to mention the player itself. When Apple announced they would support HTTP streaming for the delivery of video in H.264 to their devices, Adobe should have been quick to help CDNs deploy HTTP support for free. Instead, Adobe took their time to come out with HTTP support which won't be officially announced until next month, nearly a year after Apple's support.  Adobe's pitch to content creators should be that HTTP is better than RTMP and if they really like what Apple is doing with H.264 and HTTP support, Adobe can do that as well. While this would not help Adobe get Flash on Apple's devices, it would show content owners the value of Adobe ecosystem for creating, encoding and delivering video. For Adobe, this has to be about the ecosystem and not a one-off device like the iPad.

While it sounds like Adobe still has not made the final decision on how they plan to charge CDNs who support HTTP streaming when they announce it next month, I urge them to not be greedy. In the past, Adobe came to the CDNs and forced them to share revenue the CDNs got from delivering Flash videos over their network. Over time, Adobe did greatly reduce the Flash license fee, but CDNs are still footing the bill for what most of them call a Flash "tax". CDNs adsorb the Flash tax for larger customers but small ones still have to pay more to deliver Flash via RTMP.  When that happens, HTTP will win out. And if a content owner is going to use HTTP to deliver video, then why not do it in H.264 and HTML5 and bypass Flash all together? That's what Adobe should be concerned with.

While Adobe will officially announced HTTP support next month, with Limelight Networks being the only CDN to have it enabled on their network from day one, the two companies are presenting together at NAB this week showing how DIRECTV is the first to support HTTP Flash delivery for the PC, TV and mobile devices. Encode once, delivery everywhere. Adobe needs to fully support HTTP and put all of their weight behind it. So far, they have been slow to bring HTTP support to the market and still talk about it as something they too can do, but have yet to truly embrace it over RTMP delivery. The reason for this is that Adobe has always gotten their revenue from the CDNs thanks to RTMP, but they can't keep that mindset anymore if they plan to fully support and promote the benefits of HTTP video delivery. It also has not helped Adobe that this is one area where Microsoft has made some good traction in the market, since Microsoft has been supporting HTTP delivery for well over year now with their SmoothStreaming technology.

Adobe has been late to the game to support HTTP which is why Akamai went out and built their own technology to support delivery Flash via HTTP, something that I know Adobe did not like. It's also probably one of the reasons why even though Adobe wants to portray it as liking all of the CDNs equally, they are launching HTTP streaming with Limelight and one of Limelight's customers exclusively.

Customers are moving to HTTP delivery and before long, it will be the norm, not the exception. Yet even with those clear signs in the market, Adobe is still thinking of charging the CDNs a license fee to support HTTP streaming. While it would be cheaper than the license fee for RTMP streaming, even with HTTP streaming Adobe still requires the CDNs to have a Flash access server to sit in front of the HTTP delivery to manage licenses. This is a mistake. If Adobe wants to truly combat Apple, they need to get HTTP Flash streaming to take off so that content creators use their software to create and manage the video. That's where the revenue is, especially since only 3-4 CDNs deliver 90% of all the Flash videos on the Internet anyway. Which revenue market is bigger, the CDN market, controlled by 3-4 vendors, or the tens of thousands of content creators?

For Adobe, this approach would require a new way of thinking. For far too long Adobe has stuck to the RTMP story because of the revenue associated with it. But times have changed, HTTP is taking over the Adobe needs to adapt to that change in the market. Adobe should give CDNs the ability to delivery HTTP Flash streaming for free, with no license costs, with no Flash "tax" to content owners and really put their weight behind the benefits of moving to HTTP delivery. They absolutely CANNOT sit on their laurels and say all is fine because xx% of all computers have Flash installed.

The bottom line is that there is a lot more at stake for Adobe than whether or not Flash works on the iPad. That's what the media and bloggers want to talk about, but there is a much bigger story here. Yes, Adobe would lose some revenue from content owners not using Adobe products to generate content for the iPhone and iPad, but they will lose even more once HTTP streaming takes over if they don't throw their weight behind it now.

Adobe is at a very crucial point in their business where they need to change their way of thinking and lay the groundwork for what is taking place with HTTP video delivery. Whether they like it or not, it is going to change the industry and it's not to late for them to use it to their advantage to ensure that their ecosystem survives and grows. If they don't and instead focus their time and efforts on suing Apple, complaining about Apple or not putting 100% of their efforts behind HTTP delivery, I'm afraid they are going to have much bigger problems with their business down the line.

If Adobe wants to respond to this post via their blog, I welcome the reply or they can send me one directly and I will post their response on my blog.

  • Dan,
    Interesting post. I would just add that Adobe, unlike Apple, also has a licensable DRM platform which, once it makes it into the market, will provide Apple some serious barriers to competition beyond the iEcosystem.
    Your point about Adobe having an actual EcoSystem should include Flash DRM. Regards.

  • Agreed, content protection should be part of that ecosystem description. Encode, Protect, Deliver, Play back.

  • “Most content owners don’t use any kind of Apple software to encode video for the iPad”
    umm, i paid apple quite a lot of money for final cut pro and its subsequent upgrades. i may have paid apple quite a lot more money for the hardware on which it runs.
    both of these are used daily to encode video content suitable for the ipad.
    i haven’t paid adobe a penny for doing the same thing. adobe allowed flash to play h.264 encoded content so i haven’t need to buy anything from them, and i use a free flash player to deliver video to non html5 browsers.
    sure, i’m small fry, but all my cash is apple bound.

  • HTTP streaming is not a mature technology (yet!). RTMP, MMS and RTSP streaming are still very strong. HTTP tunneling does get you through most firewalls. You can do multiple bit rate streaming with Windows Media. Flash isn’t dominant in all parts of the world as it is in the USA. HTTP streaming also isn’t necessarily cheaper than true streaming. Software licenses are not the largest cost factor for a CDN. Operations, hardware, infrastructure, support, marketing, support are. True streaming actually reports QoS, HTTP streaming doesn’t.
    I wouldn’t declare RTSP, RTMP and MMS legacy yet. We need at least version 2 of the various HTTP streaming technologies from Apple, Adobe and Microsoft to overcome the current issues to convince customers to switch.
    I expect that early adopters will try the switch soon but the real volume won’t be switching over this year. It can take 1-3 years for content owners to change their workflows. Some will not change at all. I mean, there are content owners who are still using Realvideo…

  • FE

    Apple Qualified devices for Pro Applications are wished to integrate well in professional environment. AppleCare will support Final Cut Studio systems with integrated Apple Qualified Devices.

  • Hello Dan,
    what would be the goal for adobe to implement http when a lot
    of softwares play the role of http servers much more efficiently
    than adobe will ever do (nginx,lighthtpp, etc..), the days of
    rtmp and all the like are counted.

  • Jim Wrubel

    It is worth noting that the renewed uproar from Adobe over Apple was not actually based on the iPad launch. It began a couple of days later at the iPhone OS 4.0 announcement where Apple introduced their ban on cross-compiled applications. The upcoming CS5 Suite allowed Flash to design in ActionScript and create an Objective-C version for use on the iPhone and/or iPad. Apple’s change to the App Store T&C removed that as a possibility. As a rationale, Apple argued that ‘most of the cross-compiled applications are of low quality anyway’. For me that particular move is where this went from Apple being stubborn to Apple being anticompetitive and anticonsumer.

  • This is an interesting starting point, but your not looking far enough ahead.
    I have seen it for a long time and it is only NOW becoming so obvious that even Apple army of Religious zealot bloggers cannot even paint a sheeps head on this wolf.
    Steve has learnt that looking at future trends and making the right product at the right time is part of the key to media gateway-ing how consumers consume media.
    Being part of the transition of print to pad is a big part of this. Bringing out the iPhone, what the phone should have been without the phone companies using it as a profiteering squeeze.
    Steve has struggled with AppleTV and video in general on the iTunes store. Mainly because the industry he is trying to capture (Like he did Music) is much more organised and guilty of it themselves. They know a wolf in sheeps clothing as they wear the outfit themselves. They have done a good job at watering Steve down.. Slowing him down.
    Q: So how can Steve force their hand!!
    A: Become the ONLY viable Internet distribution technology for video.
    Viable as in a widely used distribution platform that DOES DO DRM, the video industry security blanket, and is on everyones systems from PC to mobile to netbook/Pad device.
    To do this, Adobe has to be destabalised and no longer considered the de-facto video standard.
    Streaming profits aside. this is why Apple wants Adobe removed from dominance as they are the ONLY real alternative to the iTunes infrastructure.
    This is a BIG play as, we all know, video is going Paid and direct. If you can land that channel and make a cut of EVERYTHING in the world being watched.. $$$$
    I just hope for god sake Apple does not get its way.
    It would be like Hitler winning the war, but in the media space.

  • Adobe did make a little stink about the iPad, but they didn’t whine about it as much until blog posts cited the new developer ToS that required code to be developed in native Obj-C, instead of using any 3rd party utility to transcode the utilities language to Obj-C. That hurts a major feature of CS 5, because developers won’t be able to use Flash (Actionscript) in order to produce iPhone Apps. In any case, I do agree that Adobe should stop whining. In my opinion Adobe should not care whether or not Flash is available on the device or not, they should instead create developer tools that would allow users to quickly create interactive HTML 5 video & animation. Adobe makes more money on selling to developers then licenses fees CDNs on Flash. Whether it takes 2 years or 5 years, Flash will not be the de facto standard for video, as it is today. Instead of fighting the natural progression of a web standard, Adobe should be building the tools for the future, today.

  • Excellent stuff mate.
    I am so over this Apple / Adobe issue and agree with all that you have said to both companies.
    But I do have to say that I am most dissapointed by the way that Apple has gone about things. I say this as someone who has been and is heavily involved in website development.
    I also think that the HTML 5 advocates should avoid being drawn in by Apple who, as you point out, are merely making a business decision.
    But Apple are supposed to be supporters of ‘experience’.
    Well, FLASH is an amazing experience platform and there is a long way to go for HTML 5 before it gets close to offering what the modern web development industry needs and desires.
    So, my main beef is with Apple – they are being anti-innovation while, paradoxically, supporting innovation in HTML 5.
    Jimi Bostock
    PUSH Agency
    Brisbane | Canberra | Sydney | Australia

  • facts i think:
    90% of videos streamed today are via flash or some flash derivative.That is on all electronic devices: pcs, macs, laptops, netbooks, smartphones. Right?
    But what about smart phones per se? Is flash still the facility of choice, despite Jobs’s ranting? Do other smartphones utilise flash (or flashlite) ? And if they do, its the medium of choice for smartphones as no-one is compelled to use it. Use what you like, albeit the smartphones hardware is not comparable to a PC.
    IF Iphones dont use flash for video streaming, what do they use. Does the alternative somehow indirectly use Flash?
    YOur hopefully straightforward ans would really help.