Ronna Abramson
Still, "the MSFT news indicates that this will be a highly competitive market in the future," added Kahl, who has a market perform rating on Adobe. Goldman Sachs expects to receive or intends to seek compensation for investment banking services with Adobe in the next three months.
Harry Vitelli, senior director of product management in Adobe's ePaper division, said Microsoft's move validates what Adobe has saying for the last couple years -- that creating documents, collaborating with them and extending them outside the enterprise represents a "vibrant, changing market" that also is going through a sea change associated with connections to back-end systems. Vitelli said Acrobat has supported XML for at least a couple of years. "PDF is the only format in the market today where you can say it looks exactly as it appears on paper, it prints the way you want it every single time, and you can secure it so someone else can't forward it or read it," he added. Although XDocs comes from the world's largest software maker, whose Office suite already commands more than 90% of the desktop productivity applications market, its success is still contingent on a number of things. Among them, according to industry analysts: The existence of data in an XML format and upgrades to Office 11, the next version of Office, which will incorporate far more XML features. Indeed, because of those two issues, among others, XDocs is unlikely to be a significant threat in the near term, said Paul DeGroot, an analyst who follows desktop products for Directions at Microsoft, a Kirkland, Wash.-based research firm that tracks the software giant. DeGroot noted that significant back-end programming has to be done before XDocs becomes useful. "XML authoring is very complicated and quite difficult," DeGroot said. "It's mainly something that programmers worry about at this point. Common folk don't generate XML except fairly accidentally or with tools that aren't particularly well-suited to it." Wall Street analysts focused on the threat of XDocs being at least three quarters away, but DeGroot said he thinks it's even farther out. "Let's face it. This product is a long way from seeing the light of day," he said, noting it's only version 1 that launches next year. "The conventional wisdom is it takes three tries [for Microsoft] to get it right. They've demonstrated in a lot of cases these days they can do it right in two tries," DeGroot said. Meanwhile, customer upgrades to Microsoft Office are not yet a predictable matter, said DeGroot, in part because of recent changes to Microsoft's licensing model that encourages enterprises to upgrade their Microsoft products. Microsoft reports there are 300 million to 350 million Office users in the world, though only about 175 million to 200 million are paid users.
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