26 May, 2008
AIR vs WPF: Show me the money!!
Posted by Bhavin Turakhia
I was thinking about AIR vs WPF (or Flex vs Silverlight) from another perspective today. If I wear the Adobe hat and Microsoft hat, I have to ask where is the $$$ in all of this (for Adobe and Msft).
Well firstly, both Msft and Adobe are selling the IDEs (or as they call them XXX Development Studio). But seriously - selling IDEs cant be big business.
Another revenue stream could be licensing the runtime specification for others to build their own runtimes (JDK style). While I may be totally ignorant about this - I don’t think either Msft or Adobe is doing much of this as of today. Some of the specification seems open and free. There is potential to begin licensing the runtime specs for non-PC devices such as mobile phones and set top boxes etc. However, given the competition, runtimes will likely be free for all devices and vendors (in this case Adobe / Msft) will likely go out of their way to have device vendors bundle their respective runtimes.
One more revenue stream would be self-created applications. This is much like Microsoft’s strategy with MS Office which has always been their cash-cow due to the platform ubiquity of Windows. Adobe is building a slew of their own products around Flex and AIR, and an increased adoption of their platform can result in additional revenue from their own applications. Offcourse this is always a sensitive area, since by building these applications they compete with the very app developers they want to attract to the platform. However Adobe has an advantage over Msft in this area due to the platform neutrality of AIR/Flex. Any app built by them is more attractive to an enterprise which has a heterogenous Operating System environment within the enterprise.
This brings me to the last potential revenue stream - an indirect revenue stream through propagation of the platform. Something that Msft has been very good at in the past. They made their fortunes due to the plethora of applications built in VB / VC in the good old days. The more apps that got built the more copies of Windows (and as a result Office) were sold. Here Msft has a distinct advantage. Every WPF adopter creates an additional boost in sales of Windows licenses. Unless I am missing something Adobe has no such incentive.
This indirect revenue stream appears to be significantly larger in scope than selling the IDE or licensing revenues or currently even their respective home-grown apps. If that is the case, then Microsoft has significantly more to gain by becoming a RIA standard as oposed to Adobe. This would in turn mean that Microsoft can afford to invest significantly more resources and $$s in the development of RIA as opposed to Adobe. Greater investment *may* mean more features, greater adoption and eventually platform dominance.
The one way I see for Adobe to counter this is to open up the platform and have the IBMs, Google’s, Yahoo’s, Sun’s of the world involved in AIR/Flex direction and development. This strategy has been very successful with Java on the server side (though I am sure Sun would have liked to get a greater piece of the action than it has) and if AIR/Flex is to become a default option for desktops/RIA, partnership with the rest of the industry will create the momentum it needs.
Read this interview that Knowledge@Wharton did with Scott Guthrie:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1920&CFID=54323949&CFTOKEN=54437843&jsessionid=9a30f15ffc642302d4f4
(Note: might require registration)
Excerpt from the interview:
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Knowledge@Wharton: Speaking of revenue, what’s Microsoft’s revenue model for Silverlight?
Guthrie: There are three ways that Microsoft will end up monetizing Silverlight.
The first is: We sell developer tools and servers. Silverlight does not require those and they’re fairly reasonably priced, but we will see some monetization through those businesses as people who are building Silverlight [applications] decide to buy Visual Studio or higher versions of Visual Studio than the free versions.
The second way we will monetize is by having a connection with customers who are building these types of experiences. At the platform and tools layer, it offers us an opportunity to engage with them on advertising. That doesn’t mean they have to use our advertising system. At the [MIX08] keynote [presentation], we specifically had DoubleClick — soon to be Google — on stage showing off their SDK [software development kit] for how you can integrate Silverlight with DoubleClick’s ad system.
By having a conversation with customers and giving them great tools and power with Silverlight, we expect that some proportion will say, “Hey, we’ll also enroll in the Microsoft ad system.” And that kind of advertising monetization is a two-way street: The sites doing the advertising get the bulk of the money, but we get a percentage by helping with the ad network.
And then the third way that Microsoft is going to monetize Silverlight is through our own apps and our own sites, in terms of what we sometimes call “first-party applications” that we build on top of it. Obviously, we have a lot of apps that we build, not just in the developer’s space, but in the knowledge productivity space and the enterprise space. I think that a lot of them will benefit from Silverlight as well. So we are going to be using the technology to build better apps for our existing product lines.
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Of course for media websites, there is a stream of monetiziation that Adobe has on the Media Server. I think there are some other server components as well.
The Microsoft Windows Media Services is free on top of Windows Server.
Read the entire interview though. Will give you more insights, straight from the horse’s mouth
Cheers!
That indirect revenue stream is exactly why Apple should buy Adobe (before Microsoft does).