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Tickers in this Article: ADBE, MSFT, GOOG, AAPL
As Adobe (Nasdaq: ADBE) gets ready to ship the new Creative Suite (CS3) in late Q2, it's worth looking beyond the near-term product cycle to the long term idea.

The stock just hit a 52-week high on upped short-term guidance. The street will obsess over CS suite expectations. Some of us think it's hard to make short-term money.

Sure, Adobe's Q3 will be strong as Photoshop flies off the shelves, but expectations are already high. Why play a short-term game with about 50/50 odds, when Adobe's long-term odds are much better?int

Over the long-haul, Adobe is building a wide economic moat. In software, economic moats are about as hard to come by as, well, real castle moats. But Adobe's moat is built on a deep bench of all-star products that are top seeds to win the web 2.0 raffle.

Regarding CS3, early reviews are promising. We've used the new Photoshop and it solves our two gripes about the current version (CS2) -- too slow and too hard to use.

I think the key to brisk CS3 adoption will be whether in fact it achieves "workflow integration." CS2 is not integrated, don't even get me started. Adobe is golden if the CS3 does actually integrate, rather than bundle, Photoshop (the bitmap photo app), Illustrator (the vector drawing app), the Flash workhorse and InDesign (the page layout app).

But the real idea is beyond the CS Suite. My favorites are Flash Video (the red filmstrip above); the high-end video tools Premier (Pr in purple above) and AfterEffects (Ae in purple); Coldfusion (Cf in blue), the utterly underestimated Breeze (the people icons), and most importantly, the Flex/Apollo platform.

Flash Video, you may have noticed, is starting to run up the score. It's not just for marketing that Flash Video has >95% penetration to 85% for Windows Media Player, and only 60-65% for Apple's (Nasdaq: AAPL) QuickTime and RealOne. Flash Video is the simply best choice if you are an author. If you select Flash Video, you not only rest assured that your audience can view your video, whoever they are. You also have, at the moment, better fine-tune control over your content.

Consider that several elements of the modern web appear to be destiny -- social networking (a.k.a., people media), more read/write tools so users can create content instead of just stealing it (e.g. wikis), and web services (e.g. mashups). But from a platform perspective, the most compelling trend is combining desktop functionality with the wide reach of the browser. Apollo (the red arrow icon above) starts from the desktop, it operates between the browser and the desktop -- it will try to blur the experience between blunt browsing and high-performance desktop functionality.

But this rich media internet is still way up for grabs. Microsoft (Nasdaq: MSFT) wants to stake its claim with Windows Presentation Foundation (WPF). Smart coders keep expanding on the existing technologies, so "legacy" could still win, who knows. But my bet is on Adobe.

First, their platforms are O/S agnostic. Second, they don't seem to be trying to prevail over AJAX, or HTML for that matter. Flex and Apollo don't preclude the legacy technologies (that's good because you really don't want to make coders mad). Flex 2 is a framework for building Flash applications. Flex makes it remarkably easy to build a data-driven flash application. Before Flex, Flash applications required lost of ActionScript code. But Flex builder does a lot of the coding for you.

I am less keen on Microsoft, just in this area of rich media, because the balance of power is shifting away from the desktop and toward the internet where openness and technical cooperation are vital. They didn't grow up that way. But Adobe, by acquiring Macromedia, brought under one roof, two of the most compelling and successful shared standards: the open, free PDF format and the ubiquitous, free Flash Player.

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