Microsoft, Adobe Wage Own Olympic-Scale Fight

Beijing Olympic Games
Source: Reuters

As the world’s best athletes compete in Beijing, the summer Olympic games are setting the stage for a battle between Microsoft and Adobe Systems over the Internet’s next big competition.

Microsoft’s (NASDAQ: MSFT) Silverlight technology and rival Adobe’s (NASDAQ: ADBE) Flash format are currently locked in a race over who delivers the world’s online video, but the ultimate prize may be who powers the next generation of Web software.

Using Silverlight, the NBC site offers a glimpse of what is possible with future Web applications because viewers are able to watch up to four videos at once or follow the action with an online commentary that runs alongside the video.

More than 40 million U.S. viewers have gone to NBC’s Olympics site to watch some of the 2,200 hours of live footage from the Beijing games. All those viewers need is a Silverlight player on their browser if they do not have one already.

By building up Silverlight’s user base, the world’s largest software maker is looking to win over developers who see Web platforms such as Silverlight and Flash as a new way to deliver powerful Web-linked programs incorporating rich graphics.

Currently, those platforms are mainly reserved for multimedia applications such as Google’s (NASDAQ: GOOG) popular YouTube site, which runs on Adobe’s Flash technology.

“It’s quickly becoming a very popular way to build next generation applications. There’s a lot of interest in capturing the hearts and minds of developers,” said Jeffrey Hammond, an analyst at Forrester Research. “It’ll be a big business.”

Microsoft, which said nearly half the visitors to NBC’s site did not have Silverlight, plans to expand its reach to close the gap on Flash, which is already running on most of the world’s Web-connected computers and powers over 80 percent of the video on the Internet.

For Microsoft, keeping outside developers loyal is especially important at a time when there is a major shift in how people buy software.

After years of selling licenses for software that runs on a computer’s hard drive, Microsoft is facing a new batch of competitors providing software free as a service through the Web browser in exchange for online advertising.

Taking advantage of Flash, Silverlight and other more simple Web-coding technologies such as AJAX, a new breed of interactive Web software — known as rich Internet applications (RIAs) — has emerged.

Like other Web applications, RIAs are cheaper to deploy and maintain than traditional software, but they differ from more simple Web programs by employing rich graphics, running faster and creating a seamless experience that does not require the application to constantly reload or refresh.

For example, a financial institution may use Flash or Silverlight to build a program to instantly chart stock prices or receive a steady stream of stock prices that do not require a trader to repeatedly hit refresh on his browser.

But those applications have yet to gain momentum with large corporate technology customers.

Adobe vs. Microsoft

Gartner analyst Ray Valdes said 90 percent of the top global 1,000 companies have yet to deploy any sort of RIA, while 90 percent of the top 100 consumer Web sites have already done so using the nonproprietary and more simple AJAX format.

That opportunity has Microsoft eyeing current leader Adobe for business that extends beyond Silverlight and into the sale of design tools along with server and database software to enable these new applications.

“We have a large and established customer base. There is no doubt in our minds that Microsoft is going after this space very aggressively, but we feel very strong and confident,” said Jennifer Taylor, director of Flash product development.

[cob:Special_Report]Historically, Adobe’s developer tools have focused mainly on design and creating for the Web. Now, it plans to extend that to more traditional software development with Flex, a system to help developers create and deploy applications.

Adobe plans to take the next step with tools called Adobe Integrated Runtime (AIR), which allow programs to run on the Web or offline on a computer’s desktop.

On the other hand, Microsoft is approaching Silverlight from the opposite direction. It plans to take advantage of its legions of outside developers experienced in writing for its ubiquitous Windows operating system.

The next version of Silverlight, being tested now and due later this year, will support Microsoft’s .NET framework — tools used by developers to create desktop applications that work on Windows.

“This is a logical extension of the investment that we’ve had in the development space for decades,” said Brian Goldfarb, group product manager for Microsoft’s developer division.

Microsoft introduced its first version of Silverlight a year ago, but Gartner’s Valdes said the second version is the first real form of Silverlight since the inclusion of .NET support turns the technology into “very different animal.”

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