Note: I messed up the title to this; it should read "Adobe should not be thought of as in the cold"
Liz Gannes has a post that I think morbidly sums up the tech world's opinion of Adobe - Adobe Wants to Come in from the Cold. Adobe has the most ubiquitous software on the planet. It has been instrumental in making video on the web a reality, help make Rich Internet Applications come to life, and the company revolutionized print-viewing on the web with PDF. They've done all of this, and on top of it, their stock has been doing very well recently. But the collective view from the tech world seems to parallel Liz's, namely that the company has all of these assets and doesn't seem to have a way to capitalize on them.
That's a misguided view, and it's also one of the reasons why I think the Microsoft-Adobe battle is so important. Microsoft monetizes their platform very well. Windows is at the center, and they have made a ton of money by maintaining that focus during their history. Everything always ties back to Windows, which they can charge for, and their coffers filled as a result. Adobe is the exact opposite. Adobe gives away the center of their platform (Flash) and monetizes it based on providing tools. To companies like Microsoft, Google, and Apple, where the goal is to take your core asset and make as much "direct-money" as possible (Windows, Search, Hardware), this strategy may seem like a miss.
But Adobe has worked very hard at building an ecosystem. Sure, when YouTube sells for $1.65 billion on top of a technology you've developed and you get nothing for that, it has to hurt. But if you are making all of your money on the tools, your job is to put your platform in as many places as possible. This means Linux, it means mobile devices, and it means game machines. If you can do that, and Adobe seems to be able to, you empower your developers and designers - the customers - by opening up new markets for them.
There will always be the risk that they will use your platform and not buy your tools, but there are a lot of Photoshop competitors out there and no one has massively jumped ship yet. Developers may prove to be a bit more fickle, but if Adobe can streamline the designer-developer workflow, that may make developers more sticky to Adobe tools. In the end, it makes Adobe more beholden to the people that are creating content. Adobe has a great dialogue with the people that use their tools, which translates to a better product, which in turns translate to some bar-setting web experiences that we all benefit from.
How will Adobe make money off of the new efforts? By making their tools better. They have put in a lot of work making sure that designers and developers can plug in and build things together easily. If the strategy pays off, it may mean more open platforms in the future. But Microsoft continues to loom large, and they have a great history of monetizing the platform. Adobe and Microsoft have never really competed head-to-head like this, but as the line between web applications and desktop applications continues to blur, the competition will only get more intense. Microsoft has the proven business model for software development, but don't count Adobe out because it's using a less traditional model. Designers and Developers are the key for both companies.