I am some way behind on my conference blogging. One event I that I need to write up is Adobe MAX 2006, the developer conference held at the Venetia Hotel in Las Vegas last month.
A central theme put forward during the two days of keynotes I attended (second and third days of the show) was “making money for the community”. That is a laudable goal, and one that RedMonk strongly believes in – successful ecosystems are those that create opportunities for partners. By lowering barriers to participation more valuable networks are created.
But there are really some strong tensions inherent in the means by which Adobe plans to create and sustain ecosystems. These tensions are all about just how open Adobe really is – to standards, to opportunities, to new business models. Adobe has no shortage of innovative technologies- its emerging portfolio, the fruits of the merger between Adobe and Macromedia, is literally an embarrassment of riches. But questions about how to manage that portfolio, manage the company itself, remain. Not least is the question: What is Adobe’s future business model anyway? I know one thing- its not shrinkwrap.
Before I continue I just want to emphasize that this particular blog is taking a look at business, community and political issues. its really not a MAX roundup. There was a ton of amazingly cool technology at MAX – not least the superb satchel bag, and I will talk to some of that. But not here. Cool doesn’t pay the bills (well not unless you’re a coolhunter or Apple). This piece also feels kind of negative, but in a way that’s not really a reflection on Adobe. The company is performing well, has many great people, its heart in the right place, will do extremely well. Where do I think Adobe needs to invest? In its community programs-notably for ISVs and VC firms-and in open standards and open source. Here is why:
Happy? Go? Lucky?
Shrinkwrap or not, One of the concerns I have about Adobe, au courant, is that the company seems less confident and happy than it should be, which is odd given it is performing so well from a financial point of view, and is now a serious player in more than one market- it “owns” the Flash, PDF and Photoshop franchises, with their respective communities: web designers and devs, business document managers and traditional media designers. The plucky upstart gloss should have worn off the company a long time ago. Adobe is a market dominant player now.
But some company representatives come across as surprisingly brittle on issues such as whether or not PDF is truly open, whether the web is truly broken, and whether or not Microsoft is allowed to export PDFs from Office. Its as if I was talking to an up and comer, rather than a company that had already made it.
The event threw up some interesting Us vs Them moments.
Money for other people: Walled vs Open Gardens. Google Web vs Global Telecoms. “Its not flashy but it works”.
One intriguing example came during chief software officer Kevin Lynch’s keynote on the second day, when he said, talking to, and about, the Flash community:
“We changed the web but Google made all the money”.
But which changed the web more – Google or Flash, plain text or rich user interfaces (UIs) in search of a killer app? Which technology made the web more useful, more useable? What would Jacob Nielsen say?
Take a look at a couple of players that were Web 2.0 before we thought of the name-namely Amazon and eBay. These architectures of participation didn’t have lots of bells and whistles and rotating vector graphics, but they made commerce effective. I was talking to Bola Rotibi of Ovum on the plane while writing this blog, and we talked about the challenges facing Adobe – and many of them come down to one thing. As Bola said: “Its not flashy but it works”.
That’s flashy with a small “f” but it captures things well and talks to the curse of Flash. Users don’t want flash they want effective. You sell the sizzle not the sausage, but if the customer doesn’t actually get the sausage then you have problems with any service.
We already voted on overly flashy UIs in the late 90s. Or maybe things are different now we have broadband? But the beauty of Flash in 2007 is that its often being used for better experiences (see the YouTube section below)
How might things play out with Web 2.0, the mobile Web? How can Adobe make its developers rich? Mobility perhaps: Adobe Flash is now finding its way onto more and more phones in geographies outside Asia, where its already well established as a UI-the latest US carrier to offer a Flash-based UI is Verizon (Cote’s very own favourite telecoms company). Flash games developers, for example, can write once run anywhere… wait haven’t I heard that somewhere before? From a competitive standpoint I can tell you the mobile Java communities are well aware of the battle ahead, Sun’s and Motorola’s open source J2ME maneuverings should help Java here.
Then Kevin introduced Peggy Johnson, president of Qualcomm Internet Services. BREW is apparently still out there…. The headline claim was Qualcomm has now generated $700m for developers, while last year the total was only $300m. Nice growth.
Brew is very much part of the old world telco business model predicated on the Walled Garden however, where the user environment, and access to back end services, is tightly controlled by the network operator. Far more interesting, and far harder to control the flows of revenues, though are Open Gardens. Ajit Joakar has been doing some sterling work looking at the future of mobile as an AJAX opportunity. Last week 3, the mobile network, finally introduced the kind of package consumers will actually want-all you can eat high speed bandwidth, with packaged Skype, Microsoft IM, Sling for TV on demand wherever you are, and so on. Many commentators were blown away. [Its not really an open garden because 3’s music service, for example, is DRM hobbled, but that’s a subject for another blog. Google isn’t really an open garden either, but lets not get too recursive here.]
Open gardens are the future [they always are: remember AT&T, broadcast TV, CompuServe, nationally regulated financial services]. We are moving from a world where handsets are subsidised by network fees to one where bandwidth is free and abundant. Macedonia has free wifi in all metropolitan areas. Google says wifi should be free. “Bandwidth is just part of the operating system, right” – I look forward to that antitrust case… but telcos are going to meet a nemesis sooner rather than later. If not Google then Apple. If not Apple then Cisco. if not Cisco then Intel. If not Intel then eBay Skype. If not those guys then some weird little company 99% of people have never heard of – a Jajah or Gizmo. Don’t even get me started about the opportunities around open source PBXs (asterisk) and open source routers (Vyatta).
When the Web swallows telecoms, Brew’s model will break down – so Adobe needs to be better positioned in the open garden space. The transition from Walled to unwalled won’t happen overnight – telcos have some great lawyers on staff, and these days are friends of governments everywhere. Walls take a long time to erode-just take a look at Hadrian’s or Machu Pichu. But when you tear them down-that’s another matter. Berlin has something to say on the subject.
Wait: what about YouTube? Gardens with Long Tails.
So Brew’s opportunity numbers sound really good. That’s a place to make money. Real money. But then you ask yourself wait – what about YouTube? If there was one thing that I found most odd Adobe MAX was its reticence on the subject of YouTube. What better evidence of making money for other people?
I mean, Brew has made $700m for developers in, what, ten years. YouTube made $1.6bn for its developers in 18 months. If I was Adobe I would be shouting – “Hey we’re all about that”, not, how come Google made all the money… Now here is the charm: Adobe may not have made out like bandits when YouTube sold out, but some Flash developers certainly did. That is cause for celebration, not gnashing of teeth.
Sure some geeks and open source/standards bigots (folks like Cote, Stephen and Anne, and um, me) evidently think “pure” DHTML and AJAX (but show me an AJAX library and I will show you a proprietary tag or two…) is the best (perhaps the only) way forward for the web.
The web isn’t broken, it’s just loosely coupled.
Take a pragmatic view like Fred Wilson though, and you argue that YouTube succeeded because of, not despite the fact, that the UI was Flash based. Other services didn’t make it because the UI wasn’t as good, for video upload or whatever. Fred is a Flash usability fan. My Last.fm music player is Flash based. Flash is awesome, whether or not it has a back button. Fred if I read him right, is more likely to invest in a startup that has built a Flash-based front end. It seems to me that Adobe should be building up its VC relations program, to persuade investors that the best way to create great user experiences is with Flash, while the best way to build these services is with Adobe Dreamweaver and Flex. It needs VCs to mandate Adobe in the same way VC’s resold Cisco, EMC and Oracle in Web 1.0.
Call Fred first – he might help you build the program. But Adobe must not obsess about owning more of the pie, not when its generating scads of cash like it is.
Pushing back against myself here a bit, its clear that while BREW is a mechanism that will distribute wealth across a network, open gardens tend to be about winner takes most. Walled gardens can enable Long Tail Business Models, where niches can still be turned into money. But then again, so can open gardens.
The Road to Radical Open: Why Ecosystems Are Like Nations
Which brings me back to the the Apollo and standards question. What is Apollo? Apollo is Adobe’s once and future run time that will “fix the web” by tightly integrating Flash, PDF and HTML. Early demos are interesting if not ecstatic. Apollo is Vista without the operating system. I hate to think how big the runtime is going to be, but I said this piece is about business issues didn’t I?
Given that Microsoft is determined to fight Adobe at every control point, (WP/F vs Flash, Metro vs. PDF etc) you can almost see why Adobe isn’t more bubbly. But Adobe has proven before, as has Macromedia, that they can distribute technology and have it used – you could argue that software distribution was a core competency of both firms.
But as PDF gets bigger and bigger, it becomes more of an encumbrance. That’s something Adobe has to watch out for.
To thrive in open gardens community goodwill is arguably you greatest asset because without this goodwill, people can just go elsewhere. You need low taxes as well as great infrastructure. Sensible, effective regulations. Good public education. In fact you need a lot of decent public services – good road and transport networks and so on. Managing an ecosystem is a lot like governing a country. What do you do when your community ages? Common problems. Protectionism has its place, but can hurt the economy. America would probably be performing better economically if it stopped subsidizing agribusinesses and industrial farmers. Europe certainly would.
Decent, open access, public services. In IT the nearest equivalent are are open standards and open source.
Open Source and Truly Open Standards make Happy Productive Populations
Adobe’s news, while overshadowed by all the recent Oracle-Microsoft-Novell open source noise, is probably more important in terms of web development. If the industry can coalesce around AJAX standards- and implementing them in in open source is a great way to achieve that (see Eclipse)-then we can all thrive, Adobe included.
But Adobe should not underestimate Microsoft’s willingness to give code away, especially now that Microsoft increasingly gets open source. Ignore Steve Ballmer’s recent daft statements about Linux IP – that was a throwback, kind of like catching a prehistoric fish and watching it flop around on deck wondering how come its not a fossil. Did we really just bring that up? Look at the work of the Microsoft IP team, look at Codeplex, look at the licenses behind Windows Liver Writer code, look at Ray Ozzie’s use of Creative Commons licenses. The great thing about making an open source contribution is that the EU or DoJ isn’t going to whine about it. Microsoft can once again use free software as a competitive weapon, as long as it gets the license right.
Until we heard about Tamarin, then, we were worried Adobe had no interest in the open source game, which we figured was going to harm its relations with developers. Now we’re somewhat more positive, and Kevin deserves great credit for getting me and Cote onside. He got it immediately, and we willing to trust us with MAJOR news, without asking for an NDA or any of that crap. Kevin is a rockstar, through and through.
When it comes to open standards Adobe has “da man” on its team- Duane Nickull, who has probably sat on more OASIS bodies than RedMonk has clients [disclaimer: Duane is a Friend of RedMonk and a double platinum mega value reader and contributor]. With Adobe standardsness in mind though, how come PDF is an open format not an open standard? It needs to be public infrastructure, implementable by anyone, including Microsoft. It needs a truly independent stewardship model. Adobe also needs to get hip to XForms and ODF. Why? Because these standards are gaining traction with developers, as much as anything else. They are also gaining traction with governments – one of Adobe’s key customer sets-and some verticals (eg. XForms in the UK Insurance market). I realise I said I was worried about the size of the Apollo runtime, but if it ran XForms and ODF then it really would be a once and future runtime. I would like to see Adobe open source more of it, frankly.
The biggest immediate advantage of open source and open standards contributions is developer goodwill. Just look at Sun’s decision to GPL Java. In one fell swoop IBM became the bad guy, as far as much of the GPL community is concerned. In OSS you’re only as loved as your latest contribution. What have you done for me lately?
Why be more open? The thing is, developers are smarter than Adobe. If Adobe wants to know what it wants to be when it “grows up” it needs to take a lead from its customers. What is Adobe going to give away? What is public infrastructure? Will Adobe be Sweden or Hong Kong or Estonia or the US?
How to Make Money From Developers. Spend Money on Developers. ISV program needed.
Contributions to open source and open standards is an important part of building a successful ecosystem, but so is public education. When Adobe acquired Macromedia it acquired a wonderful, passionate, articulate set of grassroots developer and developers (as Tim O’Reilly has pointed out the greatest Web 2.0 success stories tend to be a developer/designer team behind them). But Adobe’s history was shrink-wrapped, rather than platform based. This needs to change. I have spoken to some ISVs lately that would happily make greater investments in Adobe technology, if they could get some help from Adobe in doing so.
When I argued that Adobe needed to invest in a global ISV program Jeff Whatcott [nice comment on Ajaxian from Jeff here] pretty much flat out disagreed. Why? Because, he said, we already have an ISV sales program in the US. Hmmm….
At the time I thought the response was interesting, and since then I think its even more so, especially given that Whatcott argued that supporting Europe would mean having an ISV resource in every European country. Yes that is exactly what Adobe should be doing. Its not as if Adobe has any shortage of evangelists, is it? I wonder if Adobe closely tracks how many European web 2.0 startups are using Flash? Its not enough to wait til the Valley takes over the world.
And its not enough to have an ISV salesforce. Its not about making money for Adobe this quarter. its about making money for developer and ISVs. If you do that money will flow back. But making everything a sales transaction is a legacy of the shrinkwrap mentality. The salespeople that made their shrinkwrap quotas are never going to bring you the opportunities that a more conversation-based ISV program could. If you want to be a platform player, you need to spend on “public education”, and provide free support for retraining and so on. SAP is investing heavily in its ISV programs at the moment. I doubt it even has an ISV sales team… except in the sense of a team that sells SAP apps to software companies. the SAP Developer Network is exciting because it taps both grassroots and corporate developers, and SAP is making full use of fifth mover advantage. It seems strange to say it, but Adobe could learn from SDN. Actually these days I increasingly recommend that software firms try and do just that. I don’t like the term best practices but if you’re going to implement them they might as well be Kathy Sierra’s.
Adobe needs to ask itself: how can we help other software companies to kick ass, rather than how can we get software companies to pay us more money. Free consulting, Free software, Free education programs, and even more of that amazingly cool schwag. I swear to god, if schwag was the sole key to community relations then Adobe could pack up and go home now, game over.
And so Ends The Stream
In summary, Adobe gets more interesting all the time. Everything now is execution. You can’t fault RedMonk for agitating for more openness, just as you can hardly fault Adobe CEO Bruce Chizen for the job he is doing. Shareholder value-he is delivering it. Change is hard. Investment is scary. Being a platform player is hard. So is managing such a diversified portfolio. Buying Macromedia and then allowing it to take over so much of what you do is extremely ballsy. But now its time to really double down on open. That way Adobe can foster a truly great ecosystem.
disclaimers: Adobe and Microsoft are occasional, thought not full subscription clients. SAP is not a client. Adobe paid my travel and expenses to MAX, although I bought dinner for me and the crew one night…