CNET News has an article about Adobe's CEO Bruce Chizen moving into the world of online software with a light version of Photoshop that would be ad supported. Craig also has some thoughts about what it might mean for him as a consumer. As the article notes, they showed what could be possible in this arena with Adobe Remix, their video editing application built for Photobucket users.
With Breeze/Connect, the idea that they would do more hosted applications seemed like a foregone conclusion. But it really wasn't until the creative explosion on the web started touching tools that Adobe pushed that direction. There have been a slough of sites like Jumpcut, Picnik, Scrapblog, the new Brightcove application, Fauxto; that are all build on Adobe's platform with the aim of empowering users to polish their content and make it fun. With the news that Adobe is actually planning a product that would be linked to the Photoshop name, those sites have to be wondering what else is coming.
From a business standpoint, it makes perfect sense for Adobe. They can move into a more general market just at a time when excitement is ramping up. But by doing so, they are starting to compete with the users who buy their tools (the main source of revenue). A lot of startups have to think about the fact that Google might copy or implement their ideas quickly and cheaply. Now some startups on Adobe technology may have to wonder the same thing about Adobe.