Adobe’s (ADBE) Flash technology is wildly popular. Acquired from Macromedia, Flash is widely used to produce and play videos and generate advertising content over the Internet.  Adobe’s Flash player is currently installed on about 98% of computers connected to the web, and has earned a reputation as the leading program of its kind. The Flash player is distributed free of charge as a download, much like Adobe’s popular Acrobat PDF page reader. Adobe profits by selling an advanced version of the technology to the creators of Flash-enabled animation and other content.

However, despite its popularity elsewhere, Flash is unloved by Apple (AAPL).  Adobe and Apple became engaged in a bitter dispute over the launch of the iPhone. This device, one of Apple’s most popular, does not use Adobe’s Flash technology, despite the fact that Flash is widely used in competing products. Moreover, Apple Computer’s newly introduced iPad will also not be equipped to process content created with Flash technology.  Apple claims that Adobe’s Flash technology does not perform well on mobile devices.  Steve Jobs, the head of Apple Computer, has expressed concerns that the technology does not function on reduced power, that it is unstable, and has caused Apple computers to malfunction.  There have also been claims that the Flash language is lacking in security features, and is on the express track to becoming an outdated technology. Despite this, Adobe has designed a version of Flash for use on the iPhone and iPad. Its engineers boast that it performs well on these devices. 

Nonetheless, Apple is choosing to take its business elsewhere. Apple has been collaborating with some of Adobe’s competitors, including fast-rising Google. It is developing HTML5, a new language that it sees as gaining popularity, and plans to use it on its devices. However, Apple has admitted that HTML5 still has shortcomings and cannot handle web video and animation with the same dexterity as Flash. Regardless, Apple is still willing to gamble on its success. Many analysts believe that because it limits content capabilities, this decision will make the iPad less of a hit than many hoped it would be. Further, others have complained that the HTML5 language still lacks necessary patent protection and duplication features, and that this will be of concern to distributors of online material.

Apple’s decision to back HTML5 seems to be an attempt by Apple to remain in control of the technology used in its devices. Many analysts also believe the largest computer and software giants are currently battling to maintain a footing in the emerging web-based arena.  Nonetheless, Adobe is weathering the storm. Although the dispute with Apple over Flash has caused some analysts to wonder if Adobe is capable of innovating fast enough, Adobe remains a software maker of choice. Indeed, multimedia designers, using Adobe products for decades, represent a loyal band of users. Adobe has a large suite of diverse products that are all compatible, and have little credible competition.  Adobe claims that it looks forward to the emergence of HTML5, and will be building versions of Flash that work in concert with this language.