I've linked to the open letter so you can read it yourself, but here are the key arguments:
- Adobe claims that 75% of the video on the Web is in Flash format, but an increasing number of sites (including YouTube) also supply video in H.264 format that iPhone OS-compatible devices can use, so the problem is getting smaller every day. Jobs admits that Flash games won't run on iPhone OS, but there are over 50,000 games and entertainment titles already available for the iPhone, so the lack of Flash hasn't caused a problem.
- Flash is the number one reason that Macs crash, and Symantec has reported that Flash had one of the worst security records in 2009. Flash doesn't perform well on mobile devices, and Adobe has been promising to deliver a full version of Flash for mobile devices for almost two years and still hasn't shipped. Apple doesn't want to subject iPhone OS users to these problems.
- Most Flash video uses a Sorenson or On2 codec that requires software decompression, while H.264 can use hardware decompression. In Apple's tests, videos that can use H.264 hardware decompression play for 10 hours on an iPhone before the battery runs out, while viewing videos that require software decompression cuts battery life in half.
- Flash was designed for keyboard and mouse interfaces, not touch, and the iPhone, iPod touch and iPad rely on touch.
- Cross-platform development tools like Flash can't take advantage of new features as quickly as Apple rolls them out, so Flash developers can only use these features after Adobe supports them. Also, cross-platform tools encourage development of "lowest common denominator" applications.