Can Adobe Preserve Its Flash?

Adobe Flash may struggle to gain adoption on the Post-PC devices including smartphones and tablets as behavioral shift of consumers to apps from web browsing may make Flash less relevant on these devices, according to Global Equities Research.

This behavioral shift (web browsing to apps) makes Adobe Flash less relevant and we don't think Flash on Post PC devices is going to be the revenue catalyst for the Stock, Global Equities Research analyst Trip Chowdhry wrote in a note to clients.

Post-PC devices are nothing but small gadgets that run compact operating systems designed for mobility. Examples of Post-PC devices are smartphones and tablets such as Apple iPhone and iPad, Android mobile phones, BlackBerry, and the Amazon Kindle.

Initially, emailing and web browsing were the main reasons for consumers to purchase of Post-PC devices. As some of these did not support Flash, the consumers were disappointed as they could not view many of these websites.

However, starting about 4-6 months back, consumers have undergone a significant behavioral shift and they are spending about 90 percent of their time on the apps versus web browsing, said the brokerage, which has been monitoring the consumer behavior on Post-PC devices for over 12 -18 months.

Over the past 4-6 months, many popular websites have created hybrid apps, where the client portion of the website runs like a native application on the device, thus negating the need of Flash.

Analyst Chowdhry, who has an Equal-weight rating and price target of $31 on Adobe stock, said on a Post PC device, Flash will continue to pose power management issues, as supporting another runtime (Flash) poses numerous technical challenges.

Chowdhry said consumers now increasingly feel that Flash is the reason for frequent web browser crashes, and slow performance on their Desktop/Laptop. In addition, they are increasingly getting irritated with the homepage-takeover Ads, which in majority of cases use Adobe Flash.

Consumers are also getting irritated with websites that have Flash Sound/Video ads, as they find those to be very distracting and intrusive.

Consumers feel that they would rather not have Flash on their tablets, and suffer from the same negative experiences they have on their Desktop/Laptop, the analyst said.

HTML 5 Vs. Flash

HyperText Markup Language 5 (HTML 5) is speculated to be another threat to Flash as it is designed to make it easy to include and handle multimedia and graphical content on the web without having to resort to proprietary plugins like Flash and application programming interfaces.

On the other hand, Flash requires special authoring tools and a custom player that's available as a plug-in to most common browsers.

According to tests conducted by Jan Ozer of the Streaming Learning Center, while HTML5 did come out ahead in many respects, it wasn't exactly a clear winner against Flash. The tests found that HTML5 clearly performed better than Flash 10 or 10.1 in Safari on a Mac, although the differences were less clear cut in Google Chrome or Firefox.

On the other hand, Flash more than held its own on Windows, and Flash Player 10.1 was actually 58 percent more efficient than HTML5 in Google Chrome on the Windows system. One of the big factors accounting for that discrepancy is that Flash is able to take advantage of GPU hardware acceleration in Windows.

The differences between HTML5 and Flash playback on a Mac could be virtually eliminated if Flash could make use of GPU acceleration, according to Ozer.

However, companies like Apple are hesitant to use Flash on their devices like iPhone and iPad, saying the technology is draining the battery of Apple products. Apple's hesitancy to adopt Flash could be considered as a negative to the prospects of the technology as iPad and iPhone are the best sellers in their respective smartphones and tablets category.

Meanwhile, Adobe has released its Flash to HTML 5 conversion tool, codenamed Wallaby. Wallaby is an application to convert Adobe Flash Professional CS5 files (.FLA) to HTML5 and its primary design goals were to get the best quality and performance on browsers within iOS devices like iPhone and iPad.

Nevertheless, Adobe CEO Shantanu Narayen ruled out the possible threat of HTML 5 to Flash and said that Flash is used on 85 of the top 100 Web sites, 75 percent of Web video - including YouTube and Hulu.

Narayen, while speaking at the Goldman Sachs technology conference last month, said it is simply not going to be the case that all of that will be overcome by adding new tags to HTML. His view is that Flash and HTML5 will co-exist .

But could it replace Flash? Narayen said I just don't see it happening,

While explaining whether the wide adoption of HTML 5 will hurt Adobe, Narayen noted that the company is primarily making money by selling authoring tools - no matter the platform.