For sure, embedded .swf files are seeing much less use on the web. But this is not the only realm that Flash development occurs.
The company I work for does a lot of ipad apps. In the past few years we've mainly used Titanium, which is basically a form of HTML5 and Javascript converted into a standalone Ipad app. It works, but it is kind of limited and performance ranges from "acceptable" to "god-awful".
However, since Adobe released AIR 2.7, the performance of flash-based apps vastly improved, to a level where you can now make an ipad app that performs just as well as native applications (especially on second and third generation ipads). All the Titanium development work that used to be done by our developers is now being done in Flash by me and a few other flash guys. So from my perspective, Flash use is not only increasing, its exploding. And with the new Stage3D API, Flash is positioning itself to be the one-stop development environment for mobile, web, and desktop.
So long story short, I would strongly argue that Flash development is not going away, its just moving its focus from web to other platforms.
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