Harry Vitelli, senior director of product management for Adobe's ePaper Division, said he saw Microsoft's XDocs announcement as supporting Adobe's approach. "We've been articulating a strategy for the last couple of years that says we're very focused on documents...and how those documents interact with a company's back-end systems," Vitelli said. "We felt today that Microsoft's comments really validated what we've been saying. We think that having them articulate a similar message to the rest of the industry is only going to help our strategy." The online forms segment that XDocs targets is only a small part of Adobe's overall "network publishing" strategy for boosting PDF and related technologies, Vitelli added. "When we talk to customers they say they look at forms as a very small part of the problem they're trying to solve," Vitelli said. "They're looking at how all their documents are getting handled on a day-to-day basis -- things like contracts and marketing materials. Forms are really a small part of that." But investors weren't so sure. Adobe shares were down $1.80, or 9 percent, to $18.17 at market close Wednesday. Keith Gay, an analyst for Thomas Weisel Partners, said the market was overreacting to the Microsoft news, noting that Acrobat has an established record with business and the first version of the XDocs won't hit the market until mid-2003. "This does represent a potential long-term threat to the direction in which Adobe is taking Acrobat -- changing static PDF templates into dynamic, interactive electronic forms," Gay wrote in a report. "Microsoft may be seeking to combat at least the e-forms creation capability of Acrobat," Gay wrote. "However, any creation will be based on Microsoft Office and limited to Microsoft platforms. Thus, over time, Microsoft will add e-forms capability but still will not be able to replace the core value proposition of Acrobat: reliable, precise presentation regardless of application or platform." But Microsoft's Scott Bishop, Office product manager, positioned XDocs more as a replacement for proprietary or Web-based informational retrieval systems than as an alternative to PDF. "This is really about helping organisations take advantage of the vast array of information scattered throughout the enterprise by integrating people into the process," Bishop said. Microsoft also has to do a lot of work on the back end with its server products to bring XDocs up to the place where the product would pose any serious threat to Adobe in the short term. Long term, much depends on Microsoft's broader goals. "It's kind of catching the tiger by the tail," Yockelson said. "Microsoft has so many places it could point this (technology), so they're being a little cagey about what they could attack directly. If you look around a bit, the things you do impact are Adobe PDF, (Lotus) Notes or e-forms."
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