They aren't mutually exclusive. Adobe can target both to hedge their bets. The toolset they have now is well suited to creating all sorts of kickass web content, and that is what they will continue to focus on.

Wouldn't that bite into the money they make off of their Flash authoring tools?

Creative Suite is decently integrated (as long as you stay consistent within the version numbers, importing older projects into newer versions has a nasty tendency to make them no longer backwards compatible unless you specifically re-save as the old version) and there are already plugins that support converting Ai (Illustration) into Canvas (http://blogs.msdn.com/b/mswanson/archive/2010/10/12/adobe-il...). From Adobe's perspective as long as they can keep a tight grip on the authoring tools market (where they actually make money) they are better off hedging their bets.

Photoshop and Illustrator are still the gold standards within the web/design community and while not loved by everyone Flash/Flex is still a very popular platform for developing rich applications. The more Adobe can do to move Flash/Flex (the authoring tools) from being tied to the actual Flash plugin, the better it is for them in the long run.

Some times you need to explore new revenue streams. Take Apple for example. 60 percent of their sales are from products that did not exist three years ago; http://www.asymco.com/2010/10/19/60-percent-of-apples-sales-...

I'm thinking one authoring tool which oututs both swf and/or svg/canvas like in this article which outputs a video tag or swf.

I think they are already doing something similar which converts flash apps to iOS apps.

Anything that earns Adobe money is a good thing for Adobe.