Yesterday afternoon I chat with Shantanu, Adobe's president and COO, after the company released its first quarter earnings. In our conversation, I was particularly interested in how Saas or software as a service might impact Adobe's business long term, as the company actively looks at alternative business models (ad-sponsored, subscriptions...).

You will see more Adobe software available as a hosted service which enables us to get our software in front of more customers like FlashCast which delivers data services to mobile phones (e.g. with DoCoMo) and even the enterprise Livecycle set of products: a number of our customers use that in a hosted environment. So yes, you will see Adobe continue to invest in hosted services, but it's not like we haven't been there already.

And how SaaS might canibalise the traditional business going forward,

We certainly believe that imaging and video editing online make a lot of sense, as well as sharing these kinds of assets. For the absolute creative professional we still don't think that mechanism is appropriate to deliver the kind of mission critical application that they expect. But if we can use software as a service to enhance the functionality that's available in our desktop application, we think we can deliver value to our customers that way in the short run. The impact of our hosted applications is going to be very minimal on our desktop business for the next year or so.

Below are more interesting soundbytes (I think!).

On the Acrobat business,

Acrobat has it's second best quarter ever. And the video business was driven by Flash video (on the Net!).

About the publishing side of the house,

The Creative Suite 3 (CS3) launch is the biggest individual launch of products in the company's 25 years history. And this year is going to be a very rich product year with CS3, a new enterprise lifecyle product, new mobile solutions, a video refresh and Apollo.

And the impact of Cisco's WebEx buy on Adobe's visioconferencing business,

Acrobat Connect solution has unique advantages by the virtue of the fact that it's build on the ubiquitous Flash player. We do have an existing agreement with Cisco (which integrates Flash into its own web conferencing solutions). In the short term we don't see it'll (the WebEx acquisition) have any impact on our partnership. But our unique differentiation is 2 things:
1- the ease of setting up these video conferencing solutions using the Flash player,
2- the fact that we have both a hosted solution as well as an on-premise offering for our customers.

Adobe's position in the video Web,

We've beeing talking for awhile now on how we anticipated a video publishing revolution and I think Adobe is very well positioned to capitalise on that. We have the authoring toolsfor the professionals or the hobbyists, we have streaming servers that we both sell directly or in conjunction with our Content Delivery Network (CDN) partners and with Flash we have the most ubiquitous video playback on PCs, and soon on mobile with Flash Lite 3. Finally we also announced that we will be partnering with PhotoBucket to make available to their 35 million customers, online video editing tools that we could monetise through advertising. I think we have a very strong presence in video in terms of the whole video workflow.