And Adobe, with more than 500 million copies of the software in circulation, hopes to keep it that way. The company's Acrobat software turns any document into a PDF (Portable Document Format) file, which can be read or printed from any device with the original formatting intact and all text secure from revision. Free Acrobat Reader software allows PC owners to view and print PDF documents.
Now, Adobe plans to expand the Portable Document Format behind Acrobat Reader into a multipurpose business tool over the coming months.
At the same time, however, Microsoft is moving ahead with plans for software that could nibble at the edge of Adobe's market.
Earlier this year, Microsoftplans for XDocs, an extension of its Office software intended to allow workers to easily create basic online forms. Initially as a potential PDF killer, it has lost much of its luster among analysts. They now mostly see XDocs as potential competition for only part of Adobe's business.
In addition, Microsoft gave a hint of what shape other plans might take at the XML (Extensible Markup Language)-based extension of its Reader software that would let publishers create slickly formatted electronic versions of magazines. No release date was given for ePeriodicals.last month for tablet PC software. Chairman Bill Gates said future tablet PC applications would include ePeriodicals, an
Analysts said Microsoft's move onto Adobe's turf is overdue.
"I'm surprised Microsoft has let Adobe own this space as long as they have," said Paul DeGroot, lead analyst for research firm Directions on Microsoft. "Something like 80 percent of the world's business documents are created in Microsoft's .doc format. But when people need to exchange documents, there's no compact, easy-to-download, secure way to exchange them and preserve all the fonts and formatting and layout. The requirement for this kind of format was obvious to Adobe 10 years ago, and they capitalized on it."
Microsoft representatives declined to comment for this story.
In the absence of a clear picture of Microsoft's plans, Adobe needs to stay alert and make sure its Acrobat software and PDF-based tools remain relevant, analysts said. That's the focus of a number of initiatives now taking shape at Adobe.
Adobe's PDF was born in 1993, when word-processing software was well-established as a means of creating documents. Adobe capitalized on the fact that there was no easy way to ensure that a document created with one type of software could be read with another.
While several other companies offered competing software for "electronic paper," PDF quickly eclipsed them for a number of reasons. The decision to give away Acrobat Reader encouraged government agencies to adopt PDF as a universally accessible way to make forms and documents available online. Adobe drew revenue from the Acrobat software needed to output PDF files.
"I remember a lot of conversations a few years ago to the extent of, 'They're giving the Reader away; how are they going to make money off this?'" said David Yockelson, an analyst for research firm Meta Group.
"But making the Reader free really encouraged government and financial services to use PDF, and those are by far the two biggest markets for this kind of publishing," Yockelson said. "Making regulatory documents and tax forms available online really helped establish PDF."
For most of the 1990s, Adobe was content to draw a modest but reliable profit from sales of the Acrobat output software and watch PDF's market dominance grow. Over the last few years, however, pressure has grown both inside and outside the company to better capitalize on Acrobat Reader's position as one of the most widely distributed applications in the world.
Adobe developers have responded by gradually increasing the capabilities of PDF--for instance, by allowing PDF documents to accept electronic signatures. Those efforts have intensified over the past few months.
"At one point, Acrobat was known as the 'roach motel' of data formats--you could get data in, but you couldn't get it out," Adobe CEO Bruce Chizen. "That's not true anymore. Acrobat is this big container for doing things."
More ambitious changes have come from Adobe's acquisition of Accelio in February. The company's software is used to harvest data from electronic forms. Adobe's versions of Accelio products will use PDF as a framework for creating electronic documents that can shuttle data to and from common business applications.
Adobe also recentlyserver products for Acrobat that add capabilities based on XML--the lingua franca of Web services--to make PDF documents truly interactive, able to both accept data from readers and share it with others.
"You can extend enterprise information not only to your customers and partners, but to their customers and partners," said Ivan Koon, senior vice president of Adobe's ePaper division.
Koon cited the example of a mortgage loan agreement. A bank could e-mail a PDF version of the form to a customer. The customer would fill it in using the newly expanded Acrobat Reader and e-mail it back to the bank, which could disperse the submitted data using the new server tools.
Forrester Research analyst John Dalton said the strategy makes sense. "With the new Acrobat products, it's easier for data that goes into a PDF to come out of a PDF," he said. "You can route that data through a business process much more easily. That's a huge sinkhole in most companies--document intensive processes. The end game is to automate these really tedious processes, and there's only a handful of guys who can do that really painlessly. Adobe's one of them."
Big challenges remain
But pulling off the new strategy involves a number of significant internal changes at Adobe, which until now has focused almost exclusively on shrink-wrapped software. The company needs a sales force that can negotiate licensing contracts. Resources have to be in place for round-the-clock support. And systems integrators and consultants have to be schooled in the mechanics of the new PDF, to make it work with existing business systems such as those sold by SAP, a Adobe partner.
"I think they need to court more" independent software vendors, said Meta's Yockelson. "They've made a start with SAP, but they need to buddy up with a wide array of back-end software vendors.
"The bigger challenge is getting close to the developer world, getting close to the people that will have to write software to work with their stuff," Yockelson added, saying that basing the new PDF features on standard XML code is a big advantage for Adobe. "The more they can trump the XML abilities of Acrobat or the server products, the better off they'll be."
Koon said Adobe is building the support services needed, and the new enterprise sales force is getting a good response as it explains how PDF can replace pieced-together approaches to get information to and from paper documents.
"We think the opportunity for us is that we can go in there and help the CIO (chief information officer) fix these workarounds they've been dealing with for years," he said. "We can integrate documents with their transaction systems; SAP can now be extended to customers and trading partners. We don't need to sell them any new paradigm--they already know what they need. We're just trying to get to their pain points."
There's also the small matter of Microsoft. "I think a lot of speculation around XDocs derives from the fact we haven't seen it yet," Dalton said. "But as we know it now, it seems like a different solution for a different audience than what Adobe is doing. There's a big pie out there as far as document-intensive processes in the enterprise. I don't necessarily think that it's going to be a dogfight over a small sliver of a pie. There's a lot of room for both of these guys."
Koon agreed. "XDocs is a simple tool for routing data from basic types of forms," he said. "I don't think we're solving the same problem."
"In general, I don't see XDocs--as it's been explained--competing with PDF," agreed Direction on Microsoft's DeGroot. "It's very XML-specific and focused on getting data in and out of back-end systems. It doesn't have the abilities of PDF to lock down documents and allow things like secure digital signatures."
But DeGroot said XDocs may just be the start of a broader publishing strategy. He noted that Microsoft has already invested in final-format publishing products such as Microsoft Reader, and the company recently hired Joe Esbach, former head of Adobe's Acrobat division, as vice president of Microsoft's information worker product management group.
"I wouldn't rule out the idea that Microsoft wants to come up with software and a document format that does preserve a lot of formatting," he said. "Microsoft really likes to be the end-to-end solution. They don't like for you to have to use somebody else's technology to achieve an end purpose, which is the way it works now when you convert a Word document to PDF for distribution."
DeGroot said the 500 million copies of Acrobat Reader in use wouldn't necessarily deter Microsoft. "This is a battle that Microsoft has fought many times before," he said. "They've faced companies with 94 percent penetration before and eaten their lunch. WordPerfect and Lotus used to dominate their market. Netscape used to be the only game in town."
But previous Microsoft victories have been predicated on wooing mass-market users. The publishing professionals who push out PDF documents are familiar with Adobe tools, Dalton said, and are loath to change.
"It's hard to get end-users to change their toolsets," he said. "Guys who use Adobe tools to publish--Word doesn't cut much mustard with that audience. I think it's a fantasy to pretend everybody is going to be using Office in terms of enterprise publishing."