Microsoft not hurting Creative Suite, Adobe CTO says

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Only the economy, not competition from Microsoft's Expression, is dampening sales, says Adobe

By Elizabeth Montalbano and Chris Kanaracus | New York | Friday, 6 March, 2009

Adobe Systems may be feeling the pinch from the recession, but it insists that it isn't losing business to Microsoft.

Microsoft's Expression suite of tools for graphic and web designers has had no impact on its chief target, Adobe Systems' Creative Suite, Adobe CTO Kevin Lynch said in an interview this week.

“We haven’t seen any impact, really, from Expression on our business," Lynch said.

Expression, which Microsoft launched a couple of years ago, certainly faces an uphill battle against Creative Suite, which boasts a large and dedicated customer base. That installed base is Adobe's trump card, according to Lynch.

"Creative Suite’s a great product with a really strong ecosystem around it," he said. "And so our focus is on our customers and what they're trying to do, and not looking to the past or how Microsoft might be pursuing Creative Suite."

Microsoft countered that the market has responded "very favourably" to Expression, particularly among companies that already develop applications using other Microsoft software.

Even if Expression isn't hurting Adobe's business, the economy has been. Design is often the first aspect of an IT project cut when money is tight, and the print-publishing industry — longtime users of Creative Suite products InDesign and Photoshop — has been hit hard by the recession.

Adobe said on Wednesday that its first-quarter revenue would come in at no more than US$786 million, down from its target of $800 million to $850 million, and that profits would be at the low end of its estimate. It blamed the shortfall partly on weak demand for its creative products.

Earlier, in December, Adobe said it would cut 8% of its staff to help cope with the recession, which it said had been affecting sales of Creative Suite 4.

Lynch acknowledged this week that customers are being "more conservative" in their spending and that "everything" is being affected by the economy. Adobe reports its full first-quarter results on March 17.

Adobe recently extended to April 30 an introductory discount for current Creative Suite users to upgrade to Creative Suite 4, which was released in September, a move that may signal the company is trying to bolster sales of the software. The offer was meant to expire on Feb. 28.

Lynch's remarks about Expression follow similar comments made two weeks ago by Adobe CFO Mark Garrett about how adoption of Microsoft's Silverlight technology — launched in 2007 to rival Adobe Flash — has "fizzled." Microsoft responded to Garrett's comments in a blog posting by Tim Sneath, director of the Windows and Silverlight technical evangelism team, who accused Garrett of "living in a fantasy world."

Lynch echoed Garrett's comments about Silverlight in the interview. "We’ve not seen any real impact on our business from the work Microsoft has been doing with Silverlight," he said.

However, Adobe is keeping a wary eye on Silverlight in case that changes. "We're making sure we stay paranoid and make sure we don’t rest on our laurels," Lynch said.