Flash-Inside (R)
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Adobe’s Flash Lite has a enviable history of market penetration. Starting from DoCoMo handsets in May 2003, Flash Lite is quickly spreading to Europe as a feature of Nokia’s S60 and recently Series 40 platforms. As an application environment, Flash Lite is second only to Java ME in terms of market penetration, yet is controlled by a single vendor. Adobe projects to have shipped 1 billion Flash Lite -enabled devices by 2010; So how will Adobe manage to penetrate the mobile device market so agressively ?
Flash Lite penetration
As an application environment, Flash Lite’s installed base is second only to Java ME, which has been around since 1999. Yet Flash is controlled by a single vendor (Adobe), while Java ME’s roadmap is controlled by Sun and the consortium of vendors participating in the Java Community Process (JCP). How does Flash Lite’s penetration compare to other application environments ?
- Java ME is embedded on approximately 50% of devices shipping in 2007 (over 500 million) according to Informa and approx. 80% of devices shipping in 2007 according to Ovum.
- Adobe estimates 220 million Flash Lite -enabled devices (mobile and consumer electronics) to have shipped by the end of 2006; given that the ratio of mobile to CE device models is 2 to 1, we can guestimate the number of devices with Flash Lite to 145 million.
- SVG-T implementations are embedded in more than 225 million handsets to date according to Ikivo. Given that SVG-T is only a graphics rendering engine (without any scripting element prior to version 1.2) it doesn’t really compare with Flash Lite which combines both declarative and scripting elements. Version 1.2 of SVG-T implementations started shipping only recently, so there market penetration is really lower than versions 1.1 and earlier.
- Symbian OS has been shipped in 126 million devices (as of March 07) according to Symbian. This puts S60 at 60-70% of that figure.
- Other application environments (.NET Compact Framework, App Forge, Python, etc) have much lower market penetration.
So how has Adobe/Macromedia accomplished such a market penetration and how will the company manage to reach the 1 billion phones mark by 2010 ?
Aggressive subsidising
A closer inspection of Al Ramadan’s presentation during Adobe s financial analyst meeting in March 2007 reveals the following per-unit royalties for Flash Lite installations; Average royalties dropped from $0.37 in Q4 2004 to $0.31 in Q4 2005 to $0.20 in Q4 2006 (note that prices are approximate as I had to extract them from visual bar charts.). This is aggressive underpricing, far beyond the trend of price erosion for embedded mobile software today. As a $2.5 billion-a-year company, Adobe can afford to subsidise the Flash Lite product in order to stimulate sales of its tools (tools account for the majority of Adobe’s revenues). This is a classic platform->tools strategy practiced by Qualcomm (BREW sales drive chipset sales + IP royalties), Microsoft (Windows sales -> drive Windows, Office and Visual Studio sales) and Intel (new hardware architectures driven new chip sales).
The right technology
Adobe’s acquisition of French company Actimagine in October 2006 gives Adobe very fast rendering technology (by some accounts 4 times faster and 4 times smaller memory footprint in rendering Flash animations). I believe that the introduction of Actimagine rendering technology in the Flash Lite codebase in Q4 2007 will allow Flash Lite to penetrate lower-end devices (and could also explain the inclusion of Flash Lite in the Series 40 platform). Adobe estimates the target addressable market for Flash Lite to jump from 51% in 2006 to 72% in 2007 (again numbers are extrapolated from Adobe’s financial analyst presentation).
The right tools
Adobe has without doubt the best-in-class tools for mobile content development. Particularly Device Central released recently is a role model for how to best help developers take their applications to a highly diverse and fragmented market (Sun should take note).
More importantly, the UI strategy teams inside handset OEMs are people who ‘ve grown up with Flash and Macromedia’s tools. Designing mobile applications with Flash (Lite) is familiar to handset OEMs. This is despite the fact that developing core applications based on Flash UI (see the LG Prada) takes more C++ glue than meets the eye.
A ghost platform strategy
I previously argued that handset manufacturers will not buy platforms. Platforms are expensive to integrate and more importantly engender single vendor lock-in. So how has Adobe managed to embed Flash Lite on more than 200 handset models from 16 manufacturers and how will it sustain this growth ?
Adobe is merging its Flash Home, Flash Cast, Flash Lite and Flash UI products into a single codebase, which will be released towards the end of this year. Adobe is pitching the Flash family as software that will cater to any manufacturer need; whether an OEM needs to implement a vector graphics library, a UI framework, an application environment, a content-driven application (on-device portal), or an active idle screen, Flash is the tool for the job. Flash is therefore solving a short-term problem for the OEM.
And while Flash is a tactical solution, it is establishing itself as strategic platform within a large and diverse range of handset models. This is what I would call a ghost platform. It reminds me of MS-DOS and IBM. Little did IBM know that the operating system would be crucial to value generation and sustainability. But today’s handset OEM know better, right ? I ‘m sure they do, but I believe that by adopting Flash as a tactical solution, Flash might emerge as tomorrow’s Windows.
Flash-inside, anyone ?
- Andreas
as a kjava browser developer, we know one thing or two about the pain developing kjava apps across different brands. so many jvm vendors and maybe just 1-2 of them are really good. whereas Adobe takes total control of Flash lite, this would cut so much cost for developers. but hey, living in a GSM world, only Nokia and SE’ full support seems a little less than needed, at least Adobe would also get Samsung and Moto. how about giving flast lite for free to take a controlling stake? to become the “windows on mobile” status you wrote in the article. I would surely do so if I were Adobe.
Hi Steven,
Good question. Macromedia, prior to its December 2005 acquisition by Adobe was a $500 million-a-year company, i.e. about one fourth of Adobe’s size. Flash Lite brings in less than 2% of Adobe’s revenues, so it’s a small revenue source for both Adobe’s and Macromedia’s size. So if Adobe is not making much money from Flash Lite, why is it not making it free to OEMs ?
Firstly, Flash Lite royalties are doubling year-on-year, whereas Adobe revenue is increasing at a rate of 15% annually (see here for Flash Lite facts and figures ). Assuming this growth is unchanged, Flash Lite revenues might represent as much as 10% of Adobe revenues in 3 years. This is respectable revenue source that Adobe might not want to let go of.
Secondly, if Flash Lite was free (as is the Flash runtime for the desktop), Adobe would not be able to charge for Apollo mobile; I doubt the incremental features brought by Apollo mobile would be valuable to OEMs. So there would be a limited potential for revenue through Apollo mobile.
Let’s see what Adobe gains from giving away Flash Lite for free (note that this is different from open sourcing Apollo, which I do not think Adobe will do, as it will break the consistency – or relative consistency – of implementation across Flash Lite installations that Adobe is so concerned about).
Firstly, I can’t see why OEMs would not integrate Flash Lite if it’s free, especially now that the industry is beginning to see FL as a de facto standard.
Secondly, OEMs would get ‘free’ developer support via Adobe (ok, they have to pay for it or outsource it to Adobe), but it’s essentially one less product planning factor to worry about. This is particularly important for LG and Samsung who have very little developer support, if any.
Perhaps OEMs who have a longer-term software strategy (primarily Nokia and Motorola, and secondly SEMC) would resist the total penetration of Flash Lite and continue a dual-supplier strategy between Java and Flash Lite, but even then Flash Lite would grow to compete with Java in terms of penetration (50/50).
Conclusively, I see many reasons for Adobe to eventually give Flash Lite away for free, by reducing the royalties over time, so as to maintain the revenue stream as long as possible. The challenge for Adobe would then be to incentivise OEMs to buy Adobe tools for application development and content authoring, to make up for the lost revenue stream.
- Andreas
Hi Andreas,
as you mentionned flash may be use for two purposes:
+as a ui technology like in the prada phone but in that case you need a loy of c code to do the real work
+as an application framework…but really we are far far from it.
basically flash is lacking:
-some high level app dev ui paradigms (strong mvc) that flex is just beginning to give on pc
-some high level middleware services that air (new name for appolo) will bring on pc…and will have to be strongly extended for mobile (say hello to jsr )
-and a big one:no system wide view…and due to this last one be sure that the big 5 oem won’t completely standardize on flash; because to have a whole system view you have to master your execution environment and adobe won’t allow that i think.
anyway for now flash is a nice ui techno and yes adobe will try definitively to push it as a full dev framework but it is not the case today nor tomorrow and it is why companies like bluestreak are doing business today: because the adobe real strengths are their tools and dev community, not their client techo nor their knowled of mobility.
as a remark : i’ve read that flash lite 3 will use the actimagine technology….
Hi Thomas,
Responding to your points:
1. Lack of MVC model in Flash: very good point. I would say that I would also expect Flash 3.x to include screen-based primitives (as opposed to vector-based primitives) for more easily creating applications in the view of the MVC.
2. Interesting note about middleware services. Anything specific you have in mind ?
3. System wide view. Couldn’t Adobe/OEMs sandbox the system-wide view, i.e. restrict the access to environment variables ?
4. Bluestreak et al: I would say these companies are doing business on the back of strong applications (e.g. ESG), but not on the strength of their platform..
Andreas
Hi Andreas, I’ll try to clarify 
:
>1. Lack of MVC model in Flash: very good point. I would
> say that I would also expect Flash 3.x to include screen-
>based primitives (as opposed to vector-based primitives)
> for more easily creating applications in the view of the
> MVC.
In fact it is more than adding screen based primitives : it is really pushing a state controller, a notion of clear data binding to uncorrelate what is displayed from its storage/representation. And yes it is something where Flex is good at, flash alone with its frame based structure won’t be able to scale up: doing many screens in flash to do a whole UI will always be long and difficult (as opposed to Flex/TAT/DigitalAirways/OpenLazslo/Silverlight/JavaFX/…and DHTML )
>2. Interesting note about middleware services. Anything
> specific you have in mind ?
In fact the achille heel of those “interpreted solutions” (flash+actionscript/svg+Javascript/java) is in their access to native capabilities of the platform: how to map the C/C++ or even Java world in th eaction script world (or javascript) to expose relevant middleware to the applications: typically an application shouldn’t be coded only in flash but some part may have to be C/C++ to do the tricky stuffs 99% of the usefull apps or services are in fact requiring. The achille heel of java are JSRs, for flash it is their standard APIs that will always restrict you too much (not sure about flash lite 2, but addressbook with specificities, sim application toolkits, middle telephony and many others may miss).
>3. System wide view. Couldn’t Adobe/OEMs sandbox the
> system-wide view, i.e. restrict the access to environment
> variables ?
Env variable? really not enough what do you do if you want to change th ecall state machine or how the sound is shared between two sound clients (ex: call is in the native world, mp3 player in the OEM sandbox: how to resolve the conflicts?…and more than that comply with the conflict handling specification, different for each phones?)
>4. Bluestreak et al: I would say these companies are doing
>business on the back of strong applications (e.g. ESG),
>but not on the strength of their platform..
Hum, Bluestreak is for example strongly pushing its mobile APIs, but I agree for now they focus highly on very vertical services…
good discussion
I have to find the time to make a recap of the UI technologies and companies around there.
Thomas
Hi Andreas,
Do you have links for some of the stats you give in the penetration section? In particular the Ovum / Informa %ages of devices with Java (I’m inclined to think its much nearer 80% than 50%, given that we’ve had over 2bn Java devices shipped already – double Adobe’s target for 2010) and the ratio of Flash handsets to consumer electronics? I was struggling to track some of these figures down for a post I did a while back, http://blog.masabi.com/2007/07/mobile-software-primer.html
It’s a nightmare to get any kind of comparable penetration stats for platforms, it looks like I actually overestimated the Flash numbers if that 2:1 ratio is correct (they only list one consumer electronics device on the Adobe site using Flash Lite so I assumed all devices were handsets).
Interesting post though!
Tom
Hi Tom,
Ovum forecast that 8 out of 10 new phones shipping ‘today’ are Java-enabled – this estimate has been around since 2005 and may apply today according to Sun’s website. Informa’s 50% forecast comes from their MAPOS report I believe. The ratio of CE device to mobile device models comes from discussions with Adobe – but I recall seeing this echoed somewhere publically too (probably in terms of Flash-certified device models). But the extrapolation of device models ratio to a device volumes ratio is a *very* crude one.
BTW, read your post and enjoyed it – good work pulling together the stats.
Andress
visionmobile 2005-2010
visionmobile 2005-2010