Creative Cloud – Adobe Solving its Apple and Pricing Problems

April 27, 2012
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Adobe has not yet completely solved the problem of Steve Jobs and Apple. Steve   unjustifiably killed  Adobe’s Flash brand with his  libelous accusations   on the performance of Flash.  See here  for the all the details on how nefarious and self-serving Steve’s rants about Flash were but  how NO-Flash presents problems for Apple. However,  NO Flash has created a major conundrum for Adobe. First, their major source of sales, Apple Macs, are subject to direct attack from Apple with products like Final Cut Pro, Aperture, and GarageBand taking significant chunks out of Adobe’s Premiere Pro, Lightroom+Photoshop, and Auditions respectively. And what is to prevent Apple from holding back some other  hardware and software extensions and APIs which it did in the case of Flash giving its own programs a competitive advantage. Or doing a Java – that is banishing Java from iOS and then  deprecating it on Macs. In short Adobe has an OS Platform vendor that craves the markets that Adobe currently  prevails in, has more than  5times the  cash in the bank  for a complete buyout of  Adobe but is contained from doing so by possible antitrust suit from the federal government. So Apple may continue to do battle by buying out competitive vendors in the graphics software market – as noted Apple certainly has the cash.

And if that is not enough,  the other problem Adobe has had is its premium pricing for its Creative Suite. Adobe has a number of category leading creative products starting with Photoshop, Illustrator, and Dreamweaver. But this list  also includes major contenders like Premier Pro and After Effects in video processing, InDesign and Framemaker in DTP, etc.These product continue to improve technically; but they face severe price competition from two sources. First mobile apps at between 3 to $10 are a fraction of their desktop counterparts. Even Adobe’s own Mobile Touch Apps at $10 each are not breaking the bank. The second problem is a downward pressure in desktop prices as very capable  freeware and low cost programs at less than $100 compete on basic features, ease of use as well as being 1/3 to 16th the price of Adobe products. So this party among others has been wondering what Adobe could do. Well that question got answered emphatically  this week.

Adobe Creative Cloud

The next version of the Adobe’s Creative Suite will be the Creative Cloud offering of both programs and services.

Users get to download and use without limit any and all of these Adobe Creative Suite programs – for one year after purchasing a creative cloud membership. And there are a host of additional services.
1)Store, Sync and Share files with 20GB of storage on the Creative.cloud.com. So work done on an iPad or at home can be synced up with work in the office. Designs and files  can be shared with colleagues and clients allowing them access to view files and at your discretion add comments and the ability to download files. And the access is quite powerful with activation and hiding of layers in Photoshop and other products using any of the popular browsers.
2)Publish websites and Apps through the Creative Cloud Publishing features. Users can create up to 5 websites on the Creative Cloud developed using the full range of Creative Suite tools including the new Muse and Edge plus traditional tools like Photoshop, Illustrator, Dreamweaver, InDesign, Premiere Pro, etc. The only limit to those websites is the 20GB storage entitlement. With the intro later this year of the Adobe Publishing Service, users will be able to deliver apps on iPad and Android including iBook competitive eBooks and brochures.  Finally there are a host of cloud services like access to the full set of TypeKit fonts available on the Creative Cloud.
3)The Adobe CreativeCloud Team services coming late this year offers even more collaborative  and community sharing costs and services. This may be the
4)Get privileged access to new products and updates. Creative Cloud members will get updates to Digital Publishing Services, the final Adobe Edge release, and a number of other Adobe Apps and services in the pipeline. Also some major program upgrades will be available exclusively to Creative Cloud members and then published to all users later. Security and reliability updates will still be available to all  users.
If users download the full set of apps, they cost $24/app/year. And this does not take into account the full range of cloud storage, services, and new apps that Adobe has in the pipes. In sum the CreativeCloud.com is a very impressive set of programs and services.

 

How CreativeCloud Alleviates the Apple Threat

The Apple Ecosystem is becoming more grasping with the Mac Store selling ever more  software that runs on the  Mac and Apple taking  30% of all sales. The App Store is the only way users can get Apps for Apple’s iPod, iPad, and iPhone. And Microsoft, seeing the money pot, has created the Windows Store with only slightly less onerous approval and selling terms[30% rate for sale up to $25000US then 20% on sales thereafter].  The CreativeCloud provides a selling system to  get around these restrictions for the time being. But either Apple or Microsoft [or both] can make the terms for running a sold app/program ever more draconian and test in the courts the legality of demanding payment for apps downloaded and installed on their OS from a software vendor like Adobe or Intuit or other software vendor.

Adobe needs to wean more than half its users from their abject loyalty to Apple. Adobe certainly has arguments for mistreatment of its users  by Apple. This  includes  past hardware update coercions, no touchscreen operations for Mac users, and the slap in the face to hundreds of thousands of Mac Flash developers. In addition, the range of services delivered through the CreativeCloud become a loyalty point –  so Mac users as less allied to Apple and more to Adobe. It is by far not a complete solution; but does reduce the vulnerability of Adobe to continuing attack from Apple.

How CreativeCloud Alleviates the Pricing Problems

As noted above the $600/year for the creative cloud works out to $24/program/year for first time buyers and $14.40/program/year  for students and teachers. This puts Adobe much closer to mobile app pricing and very competitive with PC and Mac pricing for desktop  apps. For example, the excellent Tech Smith Camtasia Studio sells for $300 while Corel’s Draw at $499, Painter 12 at $429, and PaintShop Pro X4 at $70 – all will be under price pressure. Admittedly these do not match the less than $10 prices charged by many mobile apps. But many of these apps are still in the Etch-a-Sketch state of development relative to the senior and much more capable desktop graphic software categories.Admittedly as tablets in particular rapidly approach laptop speed and performance [and vice versa], inevitably the better mobile apps will become serious competitors to not just Adobe but the broad set of graphics software vendors.

Summary

4 months ago this observer would have shorted Adobe stock. Not anymore. Adobe’s CreativeCloud gives protection against continuing threats of Apple [and to a lesser extent Microsoft] incursions on Adobe’s turf. Likewise the pricing of Adobe programs has taken a steep downward adjustment to make it much more competitive with the upcoming crop of mobile based apps. Finally, the CreativeCloud, if executed well can become a the creative graphics place to be sort of like the Instagram of for Creatives that is OS platform neutral. It is hard to argue with Zdnet’s Chris Dawson – “Adobe nails the value question with Creative Cloud”. Yet users who want to buy the various suites and programs are not being forced to the CreativeCloud, they can continue buying just as in the past. Give Adobe management top marks for restructuring their major product line to the new Consumer Computing reality.

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