Open standards != free products.
There are many open standards out there, but they do not mean free products. Look at any other engineering discipline, and you'll find ample sets of standards that help define, build, & create control systems, cars, structures, etc. None of those standards necessitate free products. We have been spoiled in software engineering that in the past many open standards have resulted in free products. Those days are over.
Content is king, and $ is the name of the game. Apple & Adobe are jockeying for long-term position in content delivery - i.e. future revenue. They're investing tons of $ to control eye-balls not just now, but years into the future. Companies (think P&G, ESPN, NY Times, WalMart) have to make money to survive. They will send their $ to whoever controls the most eye-balls. In the recent past, that was television, now its TV & internet, and in the future it will be internet driven, but the receiving devices will not be computers as we think of them. No one knows what they will be. Apple is trying to shape & dominate those devices. Adobe wants to make sure it doesn't get cut out. Google & Microsoft are playing catchup, but aren't necessarily Adobe's friends in this fight.
Adobe is no saint bearing the flag for free or open. They want lock-in to their products/platforms as much as Apple does. Let's be honest, these are massive companies engaged in a turf battle that each recognizes carries significant long-term value for their shareholders. The principles of open/free/compatible are nothing more than pawns used to gain competitive advantage.
This is all about the benjamins...
Personally, I don't care about Flash. I developed in ShockwaveFlash w/ Lingo 10+ years ago, and fundamentally, that's the same core technology set that Adobe's still peddling as Flash now. More bells, more whistles, more tools, same idea. As a company, they have every right to protect their cash cow (see Microsoft).
Like Apple or hate Apple, you have to say they're innovating, and they're not afraid to toss the past, even their own cash cows, in favor of the future. Integrated easy to use devices are for certain a big part of the future, and they proved it by refining the phone in a way no one else had the creativity to do.