Quark walks the talk, but Adobe is doing cartwheels in computing

Clayton Hirst reports on a software firm that is not only making money as its peers in IT fall on hard times, but promising both to unclutter our offices and to usurp the king of desktop publishing

When Bruce Chizen, chief executive of Adobe, went through customs at Heathrow as part of his recent world tour of clients, an officer at the airport asked him what he did for a living.

"I work in IT," he responded. But the officer was inquisitive and asked for more details. "I work in the software industry," said Chizen.

"Which company?"

"OK, I'm the CEO of Adobe."

"Oh wow, yes, I know Adobe," said the officer. "I've got Acrobat and Photoshop on my PC at home."

Adobe is an $8.2bn (£5bn) business that is bucking the trend in the IT industry. Its shares are rising, it is expanding into new markets and the company has just revised its profits forecast - upwards. "Yeah, it's pretty rare these days," says Chizen. "We're being quite aggressive."

But the recent success of the Californian company is in an area of which most home computer users, and customs officers, will be unaware. Adobe is increasingly selling software to corporations, going head-to-head with giants such as Microsoft and Quark.

One of the main battlegrounds is in desktop publishing. For years the market was dominated by Quark-XPress, produced by the Denver-based Quark. The computer program was so popular among newspaper and magazine publishers that an understanding of QuarkXPress became a standard entry on most art- and sub-editors' CVs. But Adobe is breaking that stranglehold with its rival application, InDesign. "We are pushing hard," says Chizen. "We are now outselling Quark seven to four in terms of customers. This is a major growth area for us."

Adobe's biggest coup was persuading Australian Consolidated Press, publisher of 65 titles including the Australian version of Cosmopolitan, to ditch a variety of different software programs for InDesign. Now it has trained its sights on the UK. Already it has tied up deals with the Telegraph Group, publisher of The Daily Telegraph and The Sunday Telegraph, and Condé Nast, which produces Vogue and GQ. And it has persuaded a further 10 UK-based publishers to trial InDesign.

Adobe, founded in 1982, shot to prominence with the Acrobat document reader as the company became one of the first to realise that giving away stripped-down versions of software was a good way of generating future sales. But Chizen denies that Adobe is winning market share by giving away, or selling at below cost, copies of InDesign: "This is not the case at all. More than anything, this is down to InDesign's functions. Putting it simply, we have a much better product."

One art editor at a large UK publishing house, which has just started using InDesign, says Adobe's product "addresses lots of little things that Quark never ironed out". But, she adds, InDesign was cheaper than QuarkXPress after her firm negotiated a discount.

Adobe's second battleground is in the sector known as "e-paper". Here it is up against the mighty Microsoft.

For nearly 30 years, computer firms have painted a picture of future office utopia. Software, we were told, would transform the working environment by creating a "paperless office". Reports, notes and memos would be sent and read electronically, leaving desks and shelves clutter free. The reality, as the vast majority of office workers will testify, could hardly be more different.

Firms like Adobe and Microsoft now believe companies and organisations are ready to make the leap. Adobe, for example, predicts that its e-paper business, based on souped-up versions of its Acrobat program, could be the company's biggest money-spinner within three years.

"When will we have a totally paperless office? We are perhaps five to 10 years away," says Chizen. "Putting it simply, you can do things with paper you can't do with a computer. I can fold it up, put it in my pocket, drop it on the floor - it doesn't need to be plugged in. There will be a time when you can do this with computers. We are not quite there yet, but we are certainly moving in the right direction."

For the moment it is government departments, rather than corporations, that are taking the most interest in e-paper. In the UK, Adobe has secured deals with the Department of Trade and Industry, the Department for Environment, Food and Rural Affairs and the Department for Work and Pensions. They are using Adobe software to encourage citizens to fill in forms online.

Adobe is competing against Microsoft's XDocs program, and rivalry between the two firms goes back a long way. In 1989 Adobe's founder, John Warnock, shared a conference platform with Microsoft chairman Bill Gates. After Gates had made his presentation, Warnock took to the microphone and remarked: "That's the biggest bunch of mumbo-jumbo I've ever heard."

Chizen plays down the antagonism between the two firms. "Our relationship with Microsoft is interesting. In some places we partner with it and in other areas we compete with it aggressively. On the whole, it is not able to stay focused on a competitor like Adobe." Eric Woods, research director at technology firm Ovum, says: "Adobe needs to keep a few steps ahead of Microsoft. So far it has done that pretty well."

Nevertheless, Chizen admits that trading is still tough. "Asia is a prob- lem. Last week I was [in Japan] and the economy wasn't good. The US and Europe are doing better, partly because in the last few years companies have underinvested in software and IT. But the UK market is not that good. Government is the only sector that's really spending money at the moment." To address this, Adobe has hired its first vice-president for Europe, the Middle East and Africa - Pierre Van Beneden - who will be based in London.

Chizen is now back in the US after his tour and is preparing to report Adobe's year-end results on 12 June. When he makes his next trip to the UK, probably in six months' time, he may even get recognised at customs.

Comments