Lexcycle, maker of the Stanza e-book reader for Apple iPhones, announced on Tuesday that is has licensed Digital Editions and related technology from Adobe.   Stanza users will soon be able to read Adobe-formatted e-books on iPhones and iPod Touch devices.  The agreement will make it possible for Stanza to render both PDF and EPUB-formatted e-books.

This is a significant breakthrough for the iPhone as an e-book reading device, one that could make a major dent in Amazon’s assumed leadership trajectory with the Kindle.  

It’s already possible to read public domain e-books on the iPhone through Stanza.  And eReader.com makes in-copyright e-books available on iPhones (and many other devices) through its reader software.  But much more major publisher frontlist material is available through Adobe’s Content Server 4 and Digital Editions platforms than is available on eReader.  Every one of the dozens of e-book retailers and public libraries that use Content Server 4 — including NetLibrary and sites powered by OverDrive — will be able to offer e-books for the iPhone without any changes to their infrastructures.  

I’ve said in the past that Adobe ran the risk of doing in the e-book market what Microsoft has done in digital music: support lots of platforms but garner minimal aggregate market share against a dominant leader.  But this announcement changes the dynamics of e-book publishing.   Without having done anything, Apple will be a major player in e-books; but with support for iPhones as well as Sony Readers, Adobe is now a major player too.