Adobe CEO sees no strategy shift against MS

Adobe Systems Inc. Chief Executive Bruce Chizen sees Microsoft Corp. as a looming threat, but said on Wednesday the design software maker did not plan any change in strategy to fend off challenges.

Chizen said Microsoft will have a tough time dislodging Adobe from the design and document-sharing markets because Adobe's Flash and PDF products are so prevalent and Photoshop software users so loyal.

"The competitor I worry about most is Microsoft," Chizen told Reuters in an interview. "Our customers are loyal and as long as we keep innovating, I have a tough time figuring how Microsoft will be successful."

Adobe has been around for 24 years and is well regarded by computer designers for having invented the desktop publishing market in the 1980s and it has consolidated many of its competitors since then.

Chizen noted Windows Vista, the next generation of Microsoft's operating system, will contain a built-in graphics and document system that takes aim at Adobe products.

Microsoft is also coming up with design and development tools to compete with Adobe's Photoshop and Illustrator design programs, he said.

Yet Chizen said he is confident Microsoft's offerings will not contain features that can match Adobe's and lure customers away.

Analysts agree Adobe has a solid position to meet Microsoft's challenge, but do not discount the threat from the world's biggest software maker.

"We are increasingly concerned about several competitive inroads into its franchise... (including) Microsoft Office's upcoming inclusion of PDF creation," Oppenheimer analyst Sasa Zorovic wrote in a research note on Wednesday.

The interview came after San Jose, California-based Adobe backed its fiscal first quarter and full-year Wall Street targets, saying it was seeing solid demand in its major geographic markets.

The company, which recently closed its $3.4 billion merger with Macromedia, has seen its business and share price surge in the past year with the explosion in digital content.

Chizen, whose said the company hopes to name a new chief financial officer by the end of March, said this also presents a huge opportunity for the company to expand its reach from the desktop to a myriad of digital devices, including cell phones where users want rich content they can interact with.

"The more diverse the world is in how we view information, the better we will do," Chizen said. "We are living in a world where so much information is being communicated digitally and the challenge is how to communicate it visually."

He also said folding in Macromedia was going better than expected and the combined company had already pushed out three new products. The next version of Acrobat products later this year will also use technology from both companies, Chizen added.

Adobe closed its acquisition of Flash animation software maker Macromedia in December in a deal aimed at tightening its grip over how publishers, advertisers and ordinary Web users create and distribute electronic documents.

Analysts and investors have hailed the deal because Adobe's strength is in editing and distributing static content such as text, photos, or graphics while Macromedia is a lead in animation tools for creating Web graphics and advertising and is known for its Flash program.

Chizen also said the company was not looking at big acquisitions to drive growth, but would consider smaller deals as the company sticks to its strategy to boost sales by offering new products with "killer" features.

"We look to have must-have features in new products," Chizen said. "We tend to have pretty high upgrade rates."

 

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