Adobe CEO: The Quiet Giant

When you think of software-application giants, you think Microsoft. For Web giants, it's Google or Amazon. But aside from so-called creative professionals, not many folks think of Adobe. Nonetheless Adobe, founded in 1982, takes in almost $3 billion a year from applications like Photoshop, Illustrator and Creative Suite 3. Billions of documents are encoded in its PDF file format, and the most popular video format on the Web, including the one used by YouTube, is its Flash product. The latter came to Adobe in a $3.4 billion purchase of Macromedia two years ago. Now the company is beta-testing Adobe Integrated Runtime (AIR), a program it hopes will hasten the adoption of Web applications. The strategy comes from CEO Bruce Chizen, 52, a native Brooklynite who began his career in a sales job at Mattel's game division, followed by stints at Microsoft and Apple's onetime software arm Claris before he joined Adobe in 1994. He spoke to NEWSWEEK by phone from his office in San Jose, Calif.

LEVY:What's Adobe AIR and why is it important?
CHIZEN: Adobe AIR enables rich Internet applications. It will mean that Web applications will be able to work outside the browser, and can be used both online as well as offline. So if I'm somebody like eBay, I can present something that looks and feels like an eBay application that would be everything that a Web application is today, except it can be used offline as well as online, and works outside the browser.

What kind of applications is Adobe itself building on this?
The one that we've been public about is Adobe Media Player. It allows you to view all of your video content, whether it's on your hard drive or whether it's streamed over the Web, in a way that is much more elegant than any of the other solutions that exist today.

Do you think your rival Microsoft is abusing its dominant position in Windows and Office to compete with you?
We're always concerned they're abusing their monopoly, and we have those discussions many times and consistently with regulators around the world. There are cases in which I think they might be crossing the line. The best example is what they do today with free PDF creation in the new version of Microsoft Office. We make money with PDF creation with Acrobat, and they're using their position with Microsoft Office to give it away for free.

Not many people have a strong brand sense of Adobe. Does this bother you?
What's wonderful for Adobe is, we are pretty much everywhere you look. Your magazine was probably produced with Photoshop and Illustrator and Adobe fonts. Just about every movie probably uses Adobe After Effects for the effects or the story credits. Just about every Web site uses Flash. Every tax form you download off the IRS is done in PDF. So it's OK if the average consumer does not know who Adobe is. We're almost like air.

When you bought Macromedia two years ago, you said you wanted to blend the DNA of the two companies. How did that go?
I think we've done a dynamite job. You can see that in the products and you can see it in our work force. We've been able to take what was a relatively mature, experienced Adobe culture and marry it with a younger, more aggressive Macromedia culture.

Some of your professional software costs more than $1,000 a unit. How do you cope with piracy without making life difficult for your paying customers?
We walk a fine line, because we want to make sure our honest customer is not interfered with. But at the same time, we lose approximately one third of our potential revenue to people who steal our software. We spend a lot of energy helping people understand that if they steal our intellectual property, it means we can spend less on innovation against future upgrades and future products. We work with the U.S. government to provide enforcement for those people who are in business to make money stealing our intellectual property. We also limit our software so it can't run on more that two or three computers, and that seems to help the honest person stay honest.

Is it difficult to run a tech company when your background is in sales?
Over time, I've gotten close to the products and the engineering processes, so it's not as easy for people to fool me.

What's the biggest difference between your hometown Brooklyn and Silicon Valley?
The weather. [Laughs.] When I was growing up in Brooklyn, my dad owned a retail radio and TV store. He had to hustle for every sale he got. In some ways, Silicon Valley is like that. Each company is so competitive, and things are changing so quickly, it requires every company here to be aggressive and to stay on the edge. It reminds me of what my dad had to do in running that little appliance store in Brooklyn.