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Quick Hits: Microsoft's Silverlight to Outshine Adobe?


Brief scrutiny of today's headlines.

Microsoft (MSFT) is preparing to slug it out with Adobe Systems (ADBE) in web design software.

Adobe's Flash software, which brings ads, animation and video to websites, is being challenged by Microsoft's Silverlight.

Adobe's software is installed on about 98% of Internet-enabled PCs, while Silverlight is installed on about 25%, the Wall Street Journal reports.

But Microsoft has 2 major advantages: Deep pockets and an economic downturn that's stalling Adobe's revenue growth. Microsoft appears willing to spend heavily to pick off major websites and build market share.

The tactic appears to be working. Netflix (NFLX) recently announced that it would use Silverlight to stream movies to customers over the Internet. CBS's (CBS) college division selected Silverlight for its college sports website. Last summer, NBC Universal (GE) used Silverlight to stream the Beijing Olympics via the Internet.

But Adobe isn't sitting still. Last month, Major League Baseball switched to Flash from Silverlight to deliver games online.

Software developers routinely use Microsoft tools, but the company has had a tough time reaching web designers in a field long dominated by Adobe. Loyalty, or at least inertia, therefore may slow Microsoft's planned entry into the field.

Adobe launched the Open Screen Project to fight back. It's a group of 19 companies, including Nokia (NOK) and Verizon's (VZ) wireless unit, and encourages users to develop applications using Adobe's technology. The goal: extend Adobe's reach beyond PCs to include the software's widespread use in mobile phones and television.

Microsoft needs a win, because Vista is a disaster. Microsoft is pressured by Linux in the server market, and its Xbox is increasingly pressured by Nintendo's (NTDOY) Wii.

Adobe says its current market share gives the company about a 2-year head start, but that may not be enough to fend off Microsoft's marketing clout over the long haul.
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