Adobe 2009 Annual Report Download - page 26

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The demand for Web page layout and Web content creation tools is constantly evolving and highly volatile. In addition
to competition with Microsoft’s Expression Blend and Web products, we believe Adobe Dreamweaver and Adobe Flash
Professional face direct and indirect competition from desktop software companies such as Bare Bones Software and various
proprietary and open source Web authoring tools. We also face competition from Ajax and Microsoft Visual Studio products,
and other integrated development environments that enable developers to create Web applications from companies such as
BEA Systems (a subsidiary of Oracle), Borland and IBM. We believe our products compare favorably to these applications;
however, our market share may be constrained by Microsoft’s ability to target its Web software to users in markets it
dominates. These target customers include users of Microsoft Office, Microsoft Windows operating system, the Microsoft
Internet Explorer Web browser and Microsoft Visual Studio.
The needs of digital imaging and video editing software users are constantly evolving due to rapid technology and
hardware advancements in digital cameras, digital video cameras, printers, personal computers, cellular phones and other new
devices. Our software offerings, including Adobe Photoshop, Adobe Photoshop Extended, Adobe Photoshop Elements,
Adobe Photoshop Lightroom, Adobe After Effects, Adobe Audition, Adobe Soundbooth, Adobe Encore, Adobe Premiere
Elements and Adobe Premiere Pro, face competition from companies offering similar products. We also continue to face
competition from new emerging products, including online based services which compete directly with our Photoshop.com
offering, as well as any new competitive products coming from the open source movement.
Our other digital imaging and video editing offerings, including Adobe Photoshop Elements and Adobe Premiere
Elements, are subject to intense competition, including customer price sensitivity, competitor brand awareness and
competitor strength in OEM bundling and retail distribution. We face direct and indirect competition from a number of
companies that market software which competes with ours, including ACD Systems, AI Soft (Japan), Apple, ArcSoft, Corel,
i4 (Japan), Google, Kodak, Nova Development, Magix, Microsoft, Phase One, Photodex Corporation, Sonic, Pinnacle, Sony
and Yahoo. In addition, we face competition from device, hardware and camera manufacturers such as Apple, Canon, Dell,
Hewlett-Packard, Nikon, Sony and others as they try to differentiate their offerings by bundling, for free, their own digital
imaging software, or those of our competitors. Similarly, we face potential competition from operating system manufacturers
such as Apple and Microsoft as they integrate hobbyist-level digital imaging and image management features into their
operating systems. Finally, we face potential competition from open source products, including Gimp for Linux.
We believe we compete favorably against other digital imaging, digital video and consumer-focused image management
software applications with our Adobe Photoshop Elements and Adobe Premiere Elements products due to strong consumer
awareness of our brand in digital imaging and digital video, our relationships with significant OEMs, positive
recommendations for our products by market influencers, our increased focus on the retail software channel and strong
feature sets.
In professional digital imaging, software applications compete based on product features, brand awareness and price
sensitivity. In addition to competition with Apple’s Aperture product and Microsoft’s Expression Design product, our Adobe
Photoshop and Adobe Photoshop Lightroom products face direct and indirect competition from a number of companies
including Corel. Our Adobe Photoshop products compete favorably due to high customer awareness of the Photoshop brand
in digital imaging, the positive recommendations for our Photoshop product by market influencers, the features and technical
capabilities of the product and our ability to leverage core features from our other established products.
Our Adobe InDesign product, used for professional page layout, faces significant competition. The main competitor,
Quark, has a competitive product, Quark XPress, which has maintained a historically strong market share in the professional
page layout market. Quark also benefits from an established industry infrastructure that has been built around the use of their
XPress product in print shops and service bureaus, and through the development of third-party plug-in products. Barriers to
the adoption of Adobe InDesign by Quark XPress customers include this infrastructure, as well as the cost of conversion,
training and software/hardware procurement required to switch to InDesign. We have seen an increase in the adoption of
InDesign software and we believe we will continue to see market share gains going forward due to a product offering that
contains new innovative features, improved integration with our other products, our strong brand among users, positive
reviews by industry experts, adoption of InDesign by major accounts which are influencers in their industries and improved
infrastructure support by the industry for our overall solution.
Applications for digital video editing, motion graphics, special effects, audio creation and DVD authoring face
increasing competition as video professionals and hobbyists migrate away from analog video and audio tools towards the use
of digital camcorders and digital video production on their computers and DVD systems for rich media playback. Our Adobe
After Effects, Adobe Audition, Adobe Encore, Adobe Premiere Pro and Adobe Soundbooth software products, as well as the