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With a few clicks, the Adobe AIR “badge” embedded on the app download page takes care of installing or updating to the right version of AIR if needed.

You mean I still can't just give users an installer, but instead need to walk them through some "install this, then come back to this page and install this other thing" rigoramole?

This was my first reaction to AIR 1.x as well: if your users can tell which runtime you're running on, it's not doing well. This "separate download" rubbish isn't the only reason that VB6 and Delphi took off and Java didn't, but I suspect it played its part.

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