Adobe over­hauls how it sells soft­ware

The Star Malaysia - Star2 - - TECHNOLOGY -

ADOBE Sys­tems is over­haul­ing the way it sells its most pop­u­lar soft­ware to spur more fre­quent pur­chases by dis­tribut­ing pro­grams such as Pho­to­shop and Dreamweaver over the In­ter­net.

Adobe chief tech­nol­ogy of­fi­cer Kevin Lynch plans to re­lease what Adobe calls its Creative Cloud soft­ware pack­age early next year. The com­pany will let cus­tomers rent pro­grams on a monthly ba­sis and share their work across PCs and mo­bile de­vices, rather than make larger pur­chases that can cost more than US$1,000 (RM3,145).

The move may help Adobe, the largest maker of graphic-de­sign soft­ware, rely less on bi­en­nial re­leases to spur sales and record more con­sis­tent rev­enue growth. The Creative Cloud prod­ucts make it eas­ier for Adobe users to share their ideas over the Web, Lynch said.

“The rea­son we’re still here is we’re will­ing to change,” Lynch said in his San Fran­cisco of­fice, sur­rounded by the six com­put­ers, two Tablets and a mas­sive dig­i­tal draft­ing ta­ble he keeps to test new prod­uct ideas. “If you look at Adobe soft­ware his­tor­i­cally, it’s a per­son us­ing a com­puter to make some­thing. It’s no longer a solo ex­pe­ri­ence. You’re not alone in the cloud.”

Shar­ing work

Creative Cloud will move Adobe tools in­clud­ing the Pho­to­shop photo-edit­ing soft­ware, web­site-de­sign tool Dreamweaver and pub­lish­ing ap­pli­ca­tion In­De­sign to ver­sions that cus­tomers can down­load for a sub­scrip­tion over the Web. They can share their work online through a so-called cloud com­put­ing ser­vice.

Adobe’s creative-so­lu­tions divi­sion supplied 45% of the com­pany’s profit last quar­ter and de­liv­ered a gross mar­gin of 95%. The com­pany is fac­ing com­pe­ti­tion from Ap­ple and Mi­crosoft and an in­dus­try shift away from its Flash tech­nol­ogy for web pro­gram­ming.

The new way of sell­ing soft­ware will add an­other chal­lenge: Pro­tect­ing a gross profit mar­gin that tops the soft­ware sec­tor, ac­cord­ing to Bloomberg data.

Com­puter users will pay less for online ver­sions of Adobe’s tools than they do for ver­sions that run on Macs and Win­dows PCs, said Brent Thill, an an­a­lyst at UBS AG in San Fran­cisco.

Pric­ing to come

“In the near term, the cloud is di­lu­tive,” said Thill. Adobe, which plans to set pric­ing for the cloud com­put­ing ver­sion of its de­sign tools in Novem­ber, may need to keep prices af­ford­able to at­tract free­lance de­sign­ers who are typ­i­cally tight on cash, he said. Large pub­lish­ing and ad­ver­tis­ing com­pa­nies that use Adobe tools will con­tinue to buy more ex­pen­sive desk­top ver­sions be­cause they’ll per­form faster.

“Creative pro­fes­sion­als don’t have a lot of money,” said Thill, who rec­om­mends buy­ing Adobe shares be­cause they are in­ex­pen­sive. “Un­til the band­width gets good enough, no one’s go­ing to go all the way to the cloud.”

Lynch com­pares the change from desk­tops to mo­bile de­vices and Web soft­ware to the shift from typed com­mands to mice 20 years ago. Creative Cloud will in­clude ac­cess to six new “Touch Apps” for cre­at­ing printed pages and web­sites us­ing iPads and other Tablet com­put­ers.

While not as ro­bust as Adobe’s pricey desk­top tools, the Touch Apps may pro­vide enough

fea­tures to sat­isfy many users, said Lynch.

Soul of Pho­to­shop

“It’s not every­thing Pho­to­shop can do to­day on the desk­top, but it is the soul of Pho­to­shop,” he said.

Adobe has tin­kered with sub­scrip­tion pric­ing be­fore. Its Creative Suite 5.5 — an in­terim re­lease in April — let cus­tomers down­load sub­scrip­tion-priced ver­sions of Pho­to­shop and Dreamweaver. This time, the com­pany is fold­ing Web, desk­top and Tablet ver­sions of its soft­ware to­gether un­der one pric­ing plan. — Bloomberg

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