Adobe 2009 Annual Report Download - page 36

36
methods and other technological changes. For example, certain versions of Microsoft Windows operating systems contain a
fixed document format, XPS, which competes with Adobe PDF. Additionally, certain versions of Microsoft Office offer a
feature to save Microsoft Office documents as PDF files, which competes with Adobe PDF creation. Microsoft Expression
Studio competes with our Adobe Creative Suite family of products and Microsoft Silverlight and Visual Studio, Web
development tools for RIAs, compete with Adobe Flash, Adobe Flex and Adobe AIR. Google Gears and Sun’s JavaFX,
alternative approaches to deploying RIAs, compete with Adobe Flash and Adobe AIR. Additionally, HTML5 specifies
scripting application programming interfaces which if broadly implemented in browsers could compete with Adobe Flash.
Companies, such as Google, Sun, Apple and Microsoft, may introduce competing software offerings for free or open source
vendors may introduce competitive products. In addition, recent advances in computing and communications technologies
have made the SaaS, or on-demand, business model viable. SaaS allows companies to provide applications, data and related
services over the Internet. Providers use primarily advertising or subscription-based revenue models. We are developing and
deploying our own SaaS strategies through various business units, including our Omniture business unit, but there are
significant competitors in this area as well. For instance, our Omniture Online Marketing Suite competes with Google
Analytics, which Google offers free of charge, and other competitive SaaS offerings from companies such as Coremetrics,
Yahoo! and WebTrends. If any competing products or services in these areas achieve widespread acceptance, our operating
results could suffer. In addition, consolidation has occurred among some of the competitors in our markets. Any further
consolidations among our competitors may result in stronger competitors and may therefore harm our results of operations.
For additional information regarding our competition and the risks arising out of the competitive environment in which we
operate, see the section entitled “Competition” contained in Item 1 of this report.
If we fail to successfully manage transitions to new business models and markets, our results of operations could be
negatively impacted.
We plan to release numerous new product and service offerings and employ new software delivery methods in
connection with our transition to new business models. It is uncertain whether these strategies will prove successful or that
we will be able to develop the infrastructure and business models as quickly as our competitors. Market acceptance of these
new product and service offerings will be dependent on our ability to include functionality and usability in such releases that
address certain customer requirements with which we have limited prior experience and operating history. Some of these new
product and service offerings could subject us to increased risk of legal liability related to the provision of services as well as
cause us to incur significant technical, legal or other costs. For example, with our introduction of on-demand services, we are
entering a market that is at an early stage of development. Market acceptance of such services is affected by a variety of
factors, including security reliability of on-demand services, customers concerns with entrusting a third party to store and
manage their data, public concerns regarding privacy and the enactment of laws or regulations that restrict our ability to
provide such services to customers in the U.S. or internationally. As our business continues to transition to new business
models that may be more highly regulated for privacy and data security, and to countries outside the U.S. that have more
strict data protection laws, our liability exposure, compliance requirements and costs may increase. In addition, laws in the
areas of privacy and behavioral tracking and advertising are likely to be passed in the future, which could result in significant
limitations on or changes to the ways in which we can collect, use, store or transmit the personal information of our
customers or employees, communicate with our customers, and deliver products and services. Further, any perception of our
practices as an invasion of privacy, whether or not illegal, may subject us to public criticism. Existing and potential future
privacy laws, increased risks related to unauthorized data disclosures and increasing sensitivity of consumers to use of
personal information may create negative public relations related to our business practices.
Additionally, customer requirements for open standards or open source products could impact adoption or use with
respect to some of our products or services. To the extent we incorrectly estimate customer requirements for such products or
services or if there is a delay in market acceptance of such products or services, our business could be harmed.
From time to time we open source certain of our technology initiatives, provide broader open access to certain of our
technology, such as our OSP, and release selected technology for industry standardization. These changes may have negative
revenue implications and make it easier for our competitors to produce products or services similar to ours. If we are unable
to respond to these competitive threats, our business could be harmed.