Adobe copies Microsoft's 'Software + Services' strategy -- but little else

Another useful Adobe MAX day 1 summary -- this one from Eric Lai of Computerworld

Ask Adobe Systems Inc. CEO Bruce Chizen about the state of relations between his company and Microsoft Corp., and he finds it hard not to smirk.

"I have trouble using the words 'partner' and 'Microsoft' in the same sentence," Chizen said at the Adobe MAX 2007 North America conference here on Monday.

Yet the two longtime rivals are more similar than they may like to admit. Microsoft Office and Adobe's Creative Suite product line, which includes Photoshop, Illustrator and other applications, dominate their segments of the desktop software market. But both are starting to come under threat from free software-as-a-service alternatives offered by Google Inc. and other vendors.

I was in the audience for the Adobe executive Q&A during which Bruce Chizen was asked about Microsoft; the tone was chilly "co-opetition" with much more focus on competitive rather than complementary dimensions.

I don't agree with Eric about the "starting to come under threat from free software-as-a-service alternatives..." part, however. Adobe and Microsoft together dominate the information worker client software business, and while the SaaS/Web 2.0/etc. players get a lot of headlines, Adobe and Microsoft have very strong and profitable software businesses. Both Adobe and Microsoft are also focused on hybrid value propositions -- software + services -- for which they have competitive advantages due to their respective traditional software customer franchises and partner ecosystems.

Overall, in terms of market dynamics and competitive threats, I think Google and other potential SaaS/Web 2.0 disrupters are the ones facing stark new competitive threats this week -- from the leading incumbents: Adobe and Microsoft.

Adobe copies Microsoft's 'Software + Services' strategy -- but little else