Flash on mobile has always been a sore spot. Its battery hungry nature, a legacy of Flash applications that are incompatible with touch interfaces, and generalized animosity toward Flash's uneasy integration with the ethos of open standards of the web have given Adobe an uphill battle on the new frontiers of mobile. The fact that Apple decided to shun Flash-on-iOS certainly didn't help.
Devices that supported the 'full web,' Flash and all, had bragging rights, but debatable advantages over Flash-less devices, especially as more web developers supported HTML5 for crucial features such as streaming video (lest they miss out on iOS users, largely). If ZDNet's rumor is true, then Adobe's finally throwing in the towel. And none too soon. The longer Adobe tried to hold on to Flash, the longer it would be distracted from offering tools that mobile developers might want to buy for the looming HTML5 future.