Microsoft Aims to Outshine Adobe's Flash

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"You want a great, instant-on experience for the audience, and that's what Flash gave you," says Jeremy Allaire, founder and chief executive of Brightcove, which hosts Web videos for companies including CBS (CBS), the New York Times Co. (NYT), and Time Warner (TWX). That ease of use is what's driving Microsoft's development of Silverlight, says Allaire. "The success of Flash Video has taken them by surprise in some respects, so they've tried to catch up a bit to what the media industry really needs" (see BusinessWeek.com, 10/30/06, "What Comes After YouTube"). Brightcove has built a prototype video player that uses Silverlight and plans to make it available as an option to customers later this year.

Ever since Adobe's $3.4 billion merger with Macromedia in December, 2005, it has been butting heads more often with Microsoft, in areas including software development tools and document creation (see BusinessWeek.com, 12/27/05, "Tough Choices Ahead for Adobe"). After Adobe threatened to sue Microsoft for including free functions in its software that could threaten Adobe's products, the software giant agreed in June, 2006, to remove certain functions from its Office 2007 suite and include Flash and other Adobe software in Vista. "Microsoft is watching them even more closely than a couple of years ago, and Flash is the reason," says Rob Helm, an analyst at consulting firm Directions on Microsoft.

Silverlight Shows Versatility

Adobe's Media Player will make it easier for programmers to create video-enhanced Web sites using familiar Adobe tools including Encore and After Effects. "These are tools creative professionals have been using for over a decade," says Jim Guerard, a vice-president at Adobe. For instance, developers authoring DVDs will be able to save video in a Flash format that preserves scene markers when users watch it in the Media Player. To get those capabilities, developers will need the new versions of Adobe software included in its Creative Suite 3, a pricey lineup of bundled software that begins reaching stores Apr. 16.

Where Microsoft has fallen short—and Flash has excelled—is in the ability to combine Web-page elements and ads with online video and to work on systems other than Windows. "The one place they always get beat up, including by Adobe, is they're not cross-platform," says Forrester Research (FORR) analyst Jeffrey Hammond. Silverlight could change that. In addition to working with a variety of browsers, it also supports both next-generation DVD formats, HD DVD and Blu-ray, while Adobe works only with Sony (SNE)-backed Blu-ray.

Just don't expect Microsoft to hold its trump card, the Windows operating system, for too long. Microsoft is weeks away from releasing a line of Web design software that, when combined with Silverlight, will help developers create all manner of sophisticated online graphics. That software will work in conjunction with Windows Vista, tethering developers and their products all the more closely to Microsoft. "That's where they're going to make their money," Allaire says. And where Adobe's game of catch-up could begin.

Ricadela is a writer for BusinessWeek.com in Silicon Valley.