Adobe Expected To Lower The Cost Of The Flash Media Server (aka FMS)

September 19, 2007 by g.

So says Dan Rayburn (I am just copying the title of his recent blog post which you can find here:
http://blog.streamingmedia.com/the_business_of_online_vi/2007/09/adobe-expected-.html 
Note:  though Dan lays out the case for why Adobe should be lowering FMS pricing, he was unable to attribute any sources in his post as to whether or not this will be the case.

Elementary business strategy says that in contested markets, over long time horizons businesses can achieve either one of two things:  a) high margins, or b) large market share.

An example is the Macintosh.  Back in the late 80s and early 90s, Apple pioneered and very successfully brought to market the first mass market GUI operating system.  Strategically Apple chose to pursue high margins over market share … and today the lower priced Windows operating system still retains the market share that it gained at that time.

In the case of FMS, Dan Rayburn lays out, in the post at the link above, a pretty good sense of what goes through customers’ minds when evaluating (and reevaluating) using FMS for video streaming applications.

The story of Flash Video is a stunning business success story.  Coming from having no true video support (up through Flash Player 5), to being the current de facto standard for video on the web today.  It all started with the introduction in 2002 of true video in Flash Player 6 and Flash MX.  This initial video support was via streaming only and required FMS (then known as Flash Communications Server (FCS)).  Flash Player 7 changed the game even more by also supporting in Flash video publishing via progressive download too.  The vast bulk of video delivered in Flash today is delivered via progressive download (including YouTube).  But FMS is still critical for many use cases, most notably for content protection, efficient bandwidth utilization, improved playback experience and live webcasting.  The subsequent improvements in encoding qualities supported via On2 VP6 (introduced with Flash Player 8), and now H.264 (introduced for progressive downloads with Flash Player 9.0.60) continue to strengthen the Flash Platform as being the workflow and technology of choice for delivering video on the web.

So back to Dan’s post, yes, as end users and implementers of solutions dependent on FMS ourselves, we certainly hope that Adobe will bring FMS prices down.  Even though lower prices implies smaller margins, Adobe’s gaining market share at this critical juncture will, over the long run, most benefit Adobe themselves.  And by critical juncture I mean both the ongoing and still early stage shift of video distribution to the web, and Microsoft’s now having a much more viable offering in the web video space with Silverlight.  So for those of us who don’t want to see Microsoft achieve with web video what they achieved with GUI operating systems, let’s hope that Dan is right.

btw, Could it be that even Steve Jobs is now playing for market share over margins with the iPhone?  The recent abrupt drop in iPhone pricing certainly bolsters the case that maybe he is.  Perhaps iPhone will be able to achieve dominant market share that we will all be grateful for in the years to come.  (Assuming, of course, that Apple steps up and gets Flash Player on the iPhones.  Please?! 

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