How to lose a platform: Adobe tries to make PDF and Flash play nice

From comments by Sherif on Todd Dominey's post about Flash Player and Adobe Reader being combined:

Hmm, I wonder if Adobe just shot themselves in the foot with this announcement vis-a-vis Microsoft Sparkle (aka Expressions), which I realize isn't currently meant to be a Flash competitor. I see two possibilities:

1) Adobe tries to integrate PDF into Flash, the plugin becomes enormous, people balk at downloading it, Adobe backtracks, and keeps the two apps separate (I don't see the PDF plugin becoming smaller, at least based on past experience).

2) Microsoft sees an opportunity to win over the Flash market, after several failed versions (typically true with MS), develops an excellent, fairly small plugin (2-3MB) that does what Flash can do and more, and splits the market, forcing designers like us to buy two apps - Flash and Sparkle, giving us more headaches to deal with.

This at the same time that Dave Shea tells us that Macromedia is no more, but notes that "it has always seemed that Macromedia was fundamentally more in tune with the technology and the community."

I guess this whole post is just an excuse to ask, is it possible that Flash could be overthrown, and who would be the owner of this next platform?

Update: John Dowdell did a great job of updating the Flash Player FAQ, as well as linking to the great comments on Dave Shea's site. And, of course, running around the blogosphere leaving comments and catching this story in real time. Thanks for the comment, John.