How Adobe subscribed to a new school of success… and a new class of competitors

At last month’s online Build event, Microsoft continued its embrace of once-hated open source by highlighting improvements to GitHub, announcing a disruptive way of embedding software components into documents via the open-source Fluid Framework and showcasing a new version of a Windows subsystem for Linux. It also continued to embrace mobile clients from one-time mobile rivals Apple and Google.

Must-see offer


Try for free: Adobe Creative Cloud


Try for free: Adobe Creative Cloud

A collection of 30+ desktop and mobile apps and services for photography, design, video, web, UX, and more.

Read More

But there’s another former Microsoft rival that graced the stage with Microsoft late last year at its Surface announcement: Adobe. Debuting in 2003, Adobe’s Creative Suite was the “right-brain” counterpart to the “left-brain” Microsoft Office suite. Microsoft sparred with the creative software giant in the late 1980s when it teamed with Apple to unseat Adobe’s PostScript printer software and fonts and again in the late 2000s when it launched a Flash competitor called Silverlight and its own digital media suite called Expression Studio that failed to challenge Creative Suite.

But Creative Suite’s unit sales were stagnant, a sign to the company that it needed to expand its addressable market. Simultaneously, the rise of mobile apps was presenting a new digital platform that was evolving much faster than Adobe’s legacy of print production or even the fast-morphing web.

After a promising experiment in Australia offering its apps as a service, Adobe faced the difficult decision of whether to offer both subscription and traditional purchase models, as Microsoft continues to do today, or whether to switch completely to subscription. According to Mala Sharma, VP and GM of Creative Cloud, who managed the suite business prior to the transition, “I don’t know how many boardroom meetings I was in with Excel spreadsheets with [Adobe CEO] Shantanu [Narayen] asking questions about, you know, ‘What if the migration rate is at 20% as opposed to 30%? What happens to the business model? What happens if emerging markets behave differently?'”

Ultimately, Adobe committed to offering Creative Cloud exclusively in favor of Creative Suite. And soon, the company would gain more even exposure to the SAAS market. Repeated customer meetings in which web analytics provider Omniture had a seat at the table eventually led to Adobe purchasing the company in 2009 and entering the enterprise software market with what is now Adobe Experience Cloud. 

While offering enterprise software on a subscription basis has rapidly become more of the norm than the exception, Steve Hammond, senior director at Adobe Experience Cloud, says that he has often seen skepticism from customers regarding the subscription model, at least at the beginning of a transition. That, he says, immediately puts the onus on vendors to provide a constant stream of value. Even so, the body of work and knowledge of Adobe’s tools largely creates far more lock-in than the terms of a subscription license.

The Creative Cloud transition resulted in an initial hit to revenue as Adobe forfeited a profitable upgrade cycle, However, in terms of the original target of market expansion, the move to subscription has paid off for Adobe. Sharma shares that, at its height, Creative Suite had about three million users, but Creative Cloud has attracted three times that number.

Like Microsoft, Adobe has also had to rethink its marketing. No more are the days where a comprehensive new release marked by a major version number or year would be the focus of a hard marketing push. Sharma notes that Adobe had to become adept at “drip marketing,” touching on themes of more incremental releases and the relevance to different customer types. Events have also been key to the revised approach although those, of course, have faced challenges during the pandemic.

But the biggest challenges in Adobe’s new world lie ahead. If the shift to Creative Cloud disrupted Adobe’s existing customers, the entry into enterprise software has fundamentally changed the markets in which it plays. Whereas Adobe faced little challenge in professional graphics suites as it entered the subscription business, its move into customer experience has exposed it to a prize sought by industry giants such as Oracle, HPE, and Salesforce. As Hammond says, “Our lens on the competition has moved up in terms of the size of the corporations that we now feel like we’re competing with.” 

Still, Experience Cloud now claims use by at least nine of the top ten US financial institutions, media companies, internet retailers, global car companies, and global hotel chains. Executives claim that Adobe’s ability to close the loop between creative presentation and its business impact should serve it well as it navigates the volatile waters of martech.

PREVIOUS AND RELATED COVERAGE

Like it or not, Adobe Creative Cloud has a monopoly on our muscle memory
Over the years, users develop deep skills with the products they rely on.

Oracle takes next steps toward the customer data platform
Oracle hopes to beat Salesforce, Adobe with CX Unity, but what’s the advice for data warehouse, data lake and MDM customers?”

Adobe puts the HoloLens to work in retail 
An emerging technology group at Adobe has shown off a trio of retail enablement apps that use augmented reality to visualize analytics.

Article source: https://www.zdnet.com/article/how-adobe-subscribed-to-a-new-school-of-success-and-a-new-class-of-competitors/#ftag=RSSbaffb68