UPDATE 1-Adobe says Flash gaining in smartphone market

Wed Jun 9, 2010 11:01pm EDT

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* Adobe sees Flash on over 250 mln smartphones by 2012-end

* Sees Flash on over 53 pct of smartphones shipped in 2012

(Adds background, details, comments from Adobe)

By Sue Zeidler

SAN FRANCISCO, June 9 (Reuters) - Adobe Systems Inc (ADBE.O) on Wednesday said it sees its popular Flash Player on more than 250 million smartphones by the end of 2012 despite Apple Inc's (AAPL.O) ban on developers from using the popular multimedia software on its iPhone.

The feud between Apple and Adobe has emerged as the market for smartphones heats up.

Adobe said on Wednesday it has long provided a scaled-down version of its Flash software for cellphones that are less powerful than the new generation of smartphones which enable consumers to surf the full Web and watch videos and rich media.

Apple's Chief Executive Steve Jobs has sharply criticized Flash, calling it unreliable and ill-suited for mobile devices such as the iPhone and iPad, raising questions about its security and power-management.

But Adobe said its newest Flash version was gaining traction with smartphone makers in spite of Apple's resistance.

"Maybe we don't get to the iPhone or iPad," Anup Murarka, director of technology strategy, told Reuters in an interview, but added: "If anything, we're seeing continued growth in the install base and the usage of Flash and we see that continuing to grow," he said.

By predicting its Flash Player would be in over 250 million smartphones by the end of 2012, Adobe said it expects its Flash software to be supported in 53 per cent of the more than 300 million smartphones expected to ship in 2012.

Industry analysts predict more than 200 million smartphones to be sold in 2010, with close to 10 percent of those carrying Flash.

Adobe's newest Flash Player 10.1 will soon be available on Google's (GOOG.O) Android "Froyo" 2.2 operating system for smartphones and other devices, and Adobe's Murarka said other smartphones would soon support Flash.

"You're going to see Flash not only on Android. Consumers will see devices from Palm PALM.O, Research in Motion Ltd's RIM.TO Blackberry, Nokia's (NOK1V.HE) Symbian and Microsoft (MSFT.O) Windows Phone 7 support the full Flash Player," Murarka said.

Murarka said Flash was a strong contributor to Adobe's bottom line. "The player itself is free, but the Flash platform is a contributor to revenues. We monetize it via the tools we sell, and by far the biggest aspect of Adobes' revenues is tools," he said.

Adobe's Flash player falls under its platform business unit, which generated $46.6 million in the first quarter ended in late February, or about 6 percent of Adobe's total revenue in the first quarter.

Al Hilwa, analyst at IDC, said Adobe was the leader in the web design and development market, which totalled $850 million overall in 2009. Web design and develpment is part of the overall application development software market, which totalled $5.9 billion in 2009.

"In a scenario where Flash was to somehow see less usage, we expect Adobe's tools to continue to be used, and certainly their authoring and publishing tools like Photoshop to continue to be universally used for digital assets no matter what the development model is downstream," Hilwa said.

But he said developers were watching the Apple/Adobe feud closely to see if it would ultimately make applications more expensive to monetize if they have to re-learn new tools and implement each application from scratch in each mobile platform's native environment. (Editing by Valerie Lee)

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