Last week, news spread that Microsoft, anticipating a lawsuit from Adobe, was pulling PDF support from Office 2007. Brian Jones from the Office team wrote about the issue and even ex-softie Scoble jumped into the mix. Microsoft did a great job of getting it's version of the story out while Adobe remained silent. Over the weekend, Mike Chambers of Adobe finally gave Adobe's side of the story on his blog.
Obviously there are some very complex legal issues involved, but I think the conversation was steered in an unhealthy direction. Microsoft is in a tough position. They really do have to play by different rules and to some extent, I think that's unfair. But they do have a monopoly over the desktop market and they do wield an enormous amount of power. In this case, Adobe felt that power was being misused and impacting consumers in a negative way. Mike does a great, if belated, job of hashing out the issues Adobe is dealing with.
I think competition is one of the best things that can happen for innovation. I think Microsoft does best in markets where it is the underdog (mobile, gaming, ect). One of the reasons I enjoy watching and writing about RIAs is because I think the market is so fragmented and that a clear "winner" is a long way off. But as RIAs take hold, I think competition for old markets, like the operating system, will heat up again and consumers will be the beneficiaries.
We're seeing two companies that are moving in the same direction. Naturally, there will be some animosity and some of the old partnerships will lose out. The software industry is changing and the ramification on revenue numbers will be significant. This is the first tiff in a wider argument about how people build and interact with software. It's going to get worse before it gets better.