Adobe-as-a-service: Software vendor bets on cloud

Adobe to focus on Creative Cloud, end boxed CS products

Adobe managing director for Australia and New Zealand, Paul Robson.

Adobe managing director for Australia and New Zealand, Paul Robson.

Adobe has announced a major shift in its software strategy, revealing that Adobe CS 6 will be the final boxed version of its major design, publishing and photography products. Instead, the vendor will focus on delivering regular updates to its subscription-based Creative Cloud versions of popular applications such as Photoshop, Illustrator and InDesign.

"That's a very significant business transformation for us," said Adobe's managing director for Australia and New Zealand, Paul Robson.

"The old way of bringing technology was to aggregate, over a couple of years or 18 months, a whole heap of technology innovation in products like Photoshop. Aggregate them all then release them as a revision or a new product set. That was a legacy way that a software vendor would release technology to their customer base what."

"We've found is that customers have been asking for more timely access to that technology update," Robson said.

Shifting away from 'perpetual' products to cloud-based software means that Adobe can regularly deploy updates to its applications to add or refine functionality.

The Adobe MD said the shift away from boxed products would also eradicate problems created by version discrepancies, as well as delivering the features currently restricted to the cloud version of the software, such as online storage, cross-device synchronisation and online collaboration.

"Obviously from a value perspective for a customer they get predictability around cost, they get predictability about how much it's going to cost per month," Robson said.

The change is also a business transformation for Adobe, he added. "When you go to subscription-based revenue as an organisation, you get a more predictable revenue; so, we know how many subscribers we have."

That predictability of revenue "allows us to really invest in a predictable fashion around R&D and acquisition and innovation," he added.

"IT is a bit of a guessing game. Organisations live and die by their next release. It's about staying relevant. And it's a bet... That bet is our customers want a more timely engagement with us than to have an aggregated update every couple of years."

Focusing R&D on Creative Cloud will help its integration with Adobe's Marketing Cloud suite for digital marketing. "The ability to seamlessly connect from the Creative Cloud into the Marketing Cloud" already exists, Robson said.

But "you can kind of look forward and see the future of how integrated we want as a business our Marketing Cloud and our Creative Cloud to come together and provide that value chain to a marketing department or a marketing professional ," he added.

Adobe already has half a million Creative Cloud paid subscribers, and 80 per cent of Australian customers have chosen the cloud edition of its software over the perpetual product, according to the company.

"When I've got, in this market, 80 per cent of our individual [users] choosing to transact with Adobe in a cloud-based model in the first year of release, prior to the announcement we're making today, that's pretty telling," Robson said.

The take-up of Adobe's Creative Cloud accelerated the vendor's shift to a subscription model, Robson said.

The shift towards the subscription model, which has uniform pricing, "removes the discussion" on differential IT pricing in Australia and overseas markets, which has been the subject of a parliamentary inquiry. Robson himself appeared before the inquiry in March.

"There's no more disparity between the cloud pricing in Australia and the US," Robson said.

"The pricing discussion occurred in the middle of a business transformation, and unfortunately not all of what we were doing was reported on fairly or accurately in the mainstream press....

"Now with this announcement you get full clarity of that vision for the last 12 or 18 months... We are actively encouraging our users to move to the cloud; that technology is price parity. That price parity is for a technology that adds significantly more value than what you get when you buy it in a retail store."

Pricing differences are "no longer relevant as a discussion point," Robson said, adding the decision on focusing on Creative Cloud was made "well before" the inquiry.

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