Warnock: Adobe set to go portal

Adobe's CEO talks about the company's Web strategy, and confesses that Quark's failed takeover bid had him worried.

John Warnock, CEO of Adobe, granted a rare one-to-one interview with ZDNet UK Editor Richard Barry. He speaks frankly about Quark's failed takeover bid, his plans to launch a portal Web site, open source, and just like the celebrity guest, he has two new product launches to plug in the shape of a InDesign and a new version of Photoshop.

Only the paranoid survive may be an aphorism made famous by the boss of a certain chip manufacturer, but for Adobe's CEO, it's more of a real-life experience thing than something cool to say to reporters.

Very much the quiet man in an industry dominated by the egos of Bill Gates, Larry Ellison, and Scott McNealy, Adobe's (Nasdaq:ADBE) John Warnock rarely makes headlines but commands one of the most influential software companies in the world.

Just last August, Warnock's control over Adobe was threatened when he received a "hostile letter" from his opposite number at rival publishing software firm Quark, outlining its intention to buy Adobe -- quite a feat given Adobe's size in comparison.

Analysts at the time put Quark's revenue at $200 million (£122m) compared to Adobe's $912 million, but Warnock admits Quark's attentions were both unwelcome and worrying. "We had dropped [stock] to $24 [Adobe had previously hovered around $50] -- essentially you could have bought Adobe with its own money."

Adobe's revenge?
The creative software giant was having a rough time and paranoia was indeed setting in. But according to Warnock, Quark messed up by failing to take expert advice on the purchase. Adobe escaped but was reeling from the experience.

"We don't want Adobe perceived as a weak company," says Warnock. "We're never going there again."

It's a time he is keen to forget, but you just know that underneath the grey beard and behind the gentle smile, Warnock wants revenge on the impudent Quark.

"At a time when our stock was down and we were focusing on restructuring, [Quark's takeover bid] was a real nuisance." Warnock was annoyed at being kicked when he was down, or as one analyst commented at the time: "Quark wants to slit their throat while Adobe's down."

But a year is a long time in technology, and Warnock's charge has since gathered strength. In the second quarter this year, Adobe raked in $45 million on sales of $245.9 million earning 70 cents a share -- Wall street expected 65 cents a share.

The analysts are happy, worldwide operations have been trimmed with more than 500 jobs shed and new strategies are being fleshed out.

Adobe is about to launch a multi-pronged attack to ensure the bad times don't come again, and has a sharp focus on the Web. "The trick with the Web is to get the short-term goals in place to feed the long term goals.

"The short-term goal is to have the No. 1 professional Web authoring tool on the planet, and we're putting all the work behind GoLive to make that happen. Adobe does have a commanding share of the Web because 93 percent of Web developers use Photoshop. On the Mac platform GoLive is the preferred product; we've just released it on the Windows platform and we want GoLive to be number one. Period.

"We've just released Photoshop 5.5 which integrates ImageReady and the reviews have been awesome, so now the trick is to integrate Photoshop and GoLive in a way where the workflow is really seamless.

"Those are our short-term goals. Longer-term goals mean looking at authoring on a global basis where large companies have many content authoring problems and lots of assets. The trick is to bring the print authoring and the media aspects of their business so they can share, move and re-deploy assets more readily and make this one system."

Eyeing the Web
Warnock sees this move to the Web as the most significant challenge facing the company and talks of a commerce-centric Web presence with "substantial commerce facilities" and other interactive facilities for its customers.

In other words, Adobe.com is about to go portal.

"Adobe's site right now is in the top 50 worldwide, ahead of Apple and IBM, but we're a fairly vertical site. We really haven't been exploiting our Web resource and one of our challenges is to use that resource to get to our customers in a better way, build relationships with them, make it easier for them."

Asked what Adobe wants to become, Warnock is clear: "If there is anything to be authored, we wanna do it."

That may sound like one of those glib remarks you'd expect from an American CEO, but dig a little deeper and the creative flair that built Warnock his plush office atop a twin towered sky-scraper becomes apparent. He concedes that even the mighty need help from time to time and the open source community provides a resource rich in potential.

Warnock isn't a regular visitor to Slashdot.org (popular site for Linux users and open-source supporters), but in March, Adobe (with Sun) put up a total of $90,000 in bounties for independent developers to come up with specific implementations for the Extensible Stylesheet Language (XSL -- a working draft from the W3C that will allow developers to apply formatting guides to documents created using XML).

In effect, Adobe is putting its arms up and asking for help from the open-source community -- a significant development for a corporate, but one Warnock is entirely comfortable with.

"We really believe that this is not just a single company thing -- particularly with the plug-in architecture it has -- it's an eco-system. A whole bunch of partners who can add value."

ZDNet: "Is the open-source community something you are prepared to tap in order to solve a problem you yourselves can't fix?"

Warnock: "Absolutely. I think that's a great idea. We haven't announced any of our open source plans yet but we have plans. Certain initiatives demand that sort of relationship. What your readers should know is that for certain projects using open source is completely appropriate and especially for support on arcane platforms and handheld devices -- all kinds of things we're not going to take the initiative to support."

ZDNet: So, are you going to be in touch with the open-source community on a number of initiatives in the near future, including products like InDesign?

Warnock: Yes.

Open source comrades
Warnock believes the days of proprietary solutions are numbered.

"I think organisations like Quark, who are fiercely proprietary, will suffer at the hands of those who use open standards and invite help from the open source community.

"Would we put up the source code for Photoshop? Not in a million years, well maybe sometime in the future. But something like that is so horrendously complex it is just not feasible, the build mechanics are just too horrendous. But sure, if we needed help the open source community could provide it, absolutely."

Importantly, the open-source phenomenon is not seen by the Adobe chief as an irritation or a threat, more as a comrade to be called upon when extra heads are needed to make a product work.

If it works, you've done good, says Warnock, who is keen for ZDNet readers to know that he recently intercepted a move to upgrade Adobe's network to Windows NT in favour of Linux, which he describes as a perfectly viable alternative to NT. Almost.

"I want to pay for an operating system from a vendor with a contractual relationship that gives me recourse if things go wrong. Some people who have this utopian view that everything should be free don't understand the necessity for governments or corporations that to embrace open source, they have to have the economic foundation to do that. They need to improve their understanding of basic economics."

Ouch! Try saying that on Slashdot.

Of all the short-term challenges facing Adobe, its entry into the professional publishing arena with InDesign is the greatest.

Taking over where Pagemaker failed, InDesign will use modules or plug-ins to fill the gap in the Adobe portfolio. This modular design fits nicely into Adobe's strategy of embracing the open-source movement, and if a module goes wrong or needs a significant upgrade, the community will be invited to take part.

It also represents five years' research and hundreds of millions of dollars spent on creating what Warnock hopes will be an end to Quark's dominance in the publishing arena.

A Quark killer?
ZDNet: "What of InDesign? If Adobe wants to own the publishing sector, it doesn't need to just beat Quark -- it needs to kill Quark. Is InDesign -- the $699 successor to Pagemaker and challenge to Quark's XPress -- the Quark killer it has been dubbed?"

Warnock: "I believe InDesign is one of the finest pieces of code I have ever seen, and I hate saying that because Photoshop is also a very fine work, but InDesign is an awesome product."

ZDNet: "Is it a Quark killer?"

Warnock: "If people use it, they will prefer it."

ZDNet: "Is it a Quark killer?"

Warnock: "Yes, I think over time it is."

Reluctant customers
Of course, Adobe's boss would say that, as he seeks to rally his troops to fight on in the long war against Quark XPress.

But it's the publishing folk who remain reluctant to switch from Quark's trusted tool -- and who have to be won over if Adobe is ever going to win this war.

But if that doesn't happen, stock prices will fall and paranoia will set in again.

Like the man said: "We're never going there again."


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