Adobe overhauls how it sells software
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.”
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