XDocs An Adobe Wake-up Call

It seems like ancient history, but it was only a couple years ago when two browsers — Internet Explorer (IE) and Netscape Communicator — were evenly matched in the hearts and minds of Web surfers throughout the world.

It’s a cautionary tale for Adobe today, which found out Microsoft has ideas of its own for XML-based dynamic forms.

It’s all part of the Redmond, Wash.-based giant’s dream for a collaborative workplace entirely on the net, or .Net, in this case. XDocs, presented by Steve Ballmer, Microsoft CEO Wednesday, is part of that dream.

And if Adobe isn’t careful, it could find itself in Netscape’s position: struggling to keep the customers it has while becoming a marginal player.

XML-based documents allow businesses to forward e-forms throughout the corporation and make dynamic changes, corrections, edits, you name it. XDocs is a form aimed directly at knocking Adobe from dominance in e-documents and replace it with a Microsoft label. Plans are sketchy on XDoc particulars, outside the fact it will be released as part of some Office 11 packages.

If investor analyst opinion is any indication, it’s time for Adobe to ramp up their own plans for an XML-based e-document software application, which has been in the works since earlier this year.

Deutsche Bank Securities rates Adobe shares a “hold,” primarily concern from the investor community over Microsoft’s latest move. In a document released to its customers (ironically enough, on an Adobe .pdf file), Deutsche Bank analysts said:

“XDocs is likely the first of several steps that Microsoft can undertake to meet its customers needs directly, and this competitive threat could cut off much of Acrobat’s opportunity in the enterprise.”

Analysts point out Microsoft file formats still have many wrinkles that need ironing out before putting up a serious fight with Adobe’s .pdf files, namely inconsistent printing and secure document delivery, though analysts predict Microsoft will sort that out soon enough.

But, despite the concerns, Adobe has been largely silent about its own e-documents strategy going forward.

In February, the company bought up Accelio for $72 million, in a move giving Adobe access to server-based Web publishing technology. Then, in June, Adobe hired SAP to develop a platform to run the Adobe/Accelio hybrid.

Since then, the company has gone underground, though investor concern before Microsoft even puts out more information than the fact it has something in the works, should prompt Adobe officials to announce similar e-document plans soon.

There’s no reason for panic, yet. This isn’t the first time Microsoft and Adobe have squared off over electronic file types. When e-books were gaining popularity in 2000, Microsoft pulled a similar move with its Microsoft Reader software, in an area dominated by Adobe Reader. Adobe still holds the edge in e-book market share.