What the end of Flash means for Adobe

Adobe announced yesterday that it would stop developing Flash plugins for mobile browsers, which ultimately signals the end of Flash.

Adobe’s specific phrase in its release was: “Focusing Flash resources on delivering the most advanced PC web experiences, including gaming and premium video, as well as mobile apps.”

But the reality is that the mobile browser is the future of the web. So anyone who is using Flash today for anything should start working on a plan to eventually stop using it.

What does this mean for Adobe?

• First, this isn’t a massive sales hit. Flash only drove about 7% of Adobe’s revenue in fiscal 2009, Citi analyst Walter Pritchard estimated last May. (The mobile plugin itself is likely a loss leader.) And it’s not like Flash authoring tool sales are going to terminate immediately. After all, people are still spending an alarming amount of money on DVD movies and AOL dialup!
• The loss is mostly upside and control: If Flash on mobile or connected TV devices achieved high penetration or lock-in, Adobe had the potential to drive higher Flash authoring sales or other services in the future. (Ad delivery? Content distribution? Flash analytics?) Now it needs to reboot.
• And it’s a big strategic/emotional loss: The fact that Adobe’s ownership of one of the web’s most popular platforms is declining in importance. And that it looks bad — like it lost a war of words with the Apple camp. (Steve Jobs would have enjoyed this, no?)
• All that said, Adobe’s position as the world’s top creative software maker — how it actually makes a lot of its money — is still strong.
• Here’s what Piper Jaffray analyst Gene Munster wrote in October: “We asked Adobe users if the Apple/Flash issue would ever force them to use design tools other than Adobe’s. For the second survey in a row, every respondent (100%) indicated that they would continue to use Adobe tools despite the fact that Flash does not run on Apple devices.” That survey only reflects Apple devices, but I assume it wouldn’t change much because of Android or BlackBerry PlayBook support, either.
• Now Adobe needs to put its head down and make the best HTML5 authoring tools in the world, better than anything it has ever done for Flash. In Munster’s survey of Adobe users, “only 36% of respondents indicated that they use Adobe tools to generate HTML5 content” currently, but many indicated it’s because the tools aren’t fully baked yet. This is an opportunity for Adobe to play a major role in the future of the web — desktop, mobile, and in areas we haven’t yet imagined — by making amazing software. But I don’t necessarily have faith in Adobe to just create amazing software by default. (Have you seen the “Adobe UI Gripes” Tumblr?) It needs to actually, really do great work here.
• If anything, Adobe is making some good moves, showing that it understands where the web is going. Buying Typekit, for example, to power beautiful typography on websites. Or PhoneGap, a tool for making mobile apps. Releasing apps for Apple’s iPad and Mac App Store despite the political rift between the companies. And now realizing where Flash is headed and developing new goals for the future.

Adobe CEO Shantanu Narayen isn’t a magician, but he’s proving that he’s not a dummy. Today, Adobe — in theory — has a plan. And now it’s time to deliver.

Related: At least Adobe isn’t just sitting there while Flash nosedives