Year End - AIR and RIAs raise Adobe's profile

Adobe also marked a leadership transition in 2007, with longtime Chairman and CEO Bruce Chizen stepping aside in a planned changing of the guard to let technologist Shantanu Narayen take over the company. Analysts said the transition should go smoothly because the two executives had been working so closely together before it happened on Adobe's long-term strategy.

Narayen also brings to the company a "developer/inventor enterprise-focused guy when Adobe is going to need that," Bell said. He added that while Adobe's top executives have never had that star factor of a Larry Ellison or Bill Gates, "we have to expect [Narayen's] going to have enough personality to improve investor confidence and inspire Adobe to continue to innovate."

Through all of these twists and turns, the company continues to thrive financially. Adobe closed out the year with yearly revenue up 23 percent for the year, beating Wall Street estimates and reaching nearly US$1 billion in sales for its fiscal fourth quarter. Its yearly revenue of US$3.16 billion and quarterly revenue of US$911.2 million were both records for Adobe, which expects another year of double-digit percentage revenue growth in 2008.

While there's no question Adobe made its own smart strategic moves in 2007, the company also benefited during the year from good timing, as RIAs came into their own and opened up a whole new market for any company that can help developers build them.

EffectiveUI's Franco said that RIAs are no longer the realm of early adopters, which tend to be smaller companies that want to be seen as having cutting-edge design for their Web applications. "Where we're seeing our biggest growth is ... large industry players leverage the Flash player to build RIAs," he said. And with Adobe AIR, EffectiveUI is also able to bring those same Web applications to corporate desktops.

Among EffectiveUI's customers are eBay, Dow Jones and Viacom. The company also built a package-shipment and tracking system for United Airlines. Using Flash, the application replaced an old "green screen" terminal user-interface without replacing the back-end mainframe technology powering it, Franco said.

This cross-platform power is another boon for Adobe as it does battle with Microsoft to control the content being delivered on the Web, which Cutcliffe said is key to being a market leader and influencer in the current, Web-driven technology market. Though Microsoft has built Silverlight to be cross-platform and work in all of the common Web browsers, Adobe has been working with Apple for years to optimize its products for the Mac, which is becoming a more popular platform in its own right.

"I still believe the ultimate goal is content control," he said. "If your tool becomes the favorite tool of developers, you're going to control the content in the long run. ...I think Adobe has the advantage if somebody wants to get into developing applications that can be deployed both on Windows and on a Mac, or whatever type of an environment they're running."

As RIAs themselves have more market value, Adobe also is positioning itself to compete in the enterprise with products like Adobe LifeCycle, which allows business customers to automate the business processes and workflow of PDF-based Web transactions, IDC's Webster said.

LiveCycle provides support for asynchronous Web transactions, which is helpful for users who are providing information -- for example, to an insurance company -- online but don't have all the necessary information on hand to fill out the forms. LifeCycle allows users to go offline in the middle of filling out Web-based forms and return at a later time online back to where they left off, she said.

"With [LifeCycle] it's easy to move that form back online and connect that document back up to the point in the transaction where it went asynchronous," Webster said. "It's a win for both sides."

This is another area where Adobe runs into Microsoft, which aims to offer similar workflow automation through products in its 2007 Microsoft Office System, particularly through functionality in its SharePoint Server and InfoPath software. Now that its RIA strategy is sound, proving it's a worthy enterprise player through products like LiveCycle will be a critical area of focus for Adobe in 2008 as it competes in the technology market on a whole new level.