Case Study of ARTS PDF vs. Adobe

clipped from www.inc.com For 10 years, Karl De Abrew and Sam Chandler had a happy, productive relationship with Adobe, developing plug-ins to enhance Acrobat PDF software and consulting with the software giant, based in San Jose, California, on developer support. And Adobe seemed just as happy with ARTS PDF, De Abrew and Chandler's Melbourne, Australia-based company; it even sponsored ARTS PDF's online community of PDF users, Planet PDF. By 2003, ARTS PDF had 30 full-time employees and half of its $3 million in annual revenue came from Adobe-related projects. But the two partners were plotting a move that once would have seemed insane--severing the relationship and instead competing with Adobe with a PDF product of their own. The problem was the way Adobe had begun treating third-party developers like ARTS PDF. Since the release of Adobe Acrobat in 1993, such developers had been key to Adobe's strategy. The company created the application with an open standard, giving any developer access to the software's specifications and a free license to create applications to extend its capabilities. Hundreds of third-party developers had based their businesses on Acrobat. ARTS PDF, for example, scored a big hit with a plug-in that, among other things, allows users to activate Web links in PDF documents, and sells the software on its own website, PDF Store. But Adobe's CEO, Bruce Chizen, who took over from co-founder John Warnock in 2000, had grown wary of working with outsiders. Warnock used to refer to the hundreds of third-party developers as Adobe's "ecosystem." Under Chizen's leadership, however, the company began reengineering the third-party plug-ins itself, incorporating them into new and increasingly complicated versions of Acrobat. That sparked concern among developers. If consumers could buy Acrobat software loaded with the latest extras, they would no longer need plug-ins.