Adobe Systems, Inc., (Nasdaq:ADBE) is moving to change its lifetime license model to a monthly subscription-based offering. Adobe launched the effort this week around the globe with Creative Cloud, a new way of providing its tools and services. It is a hub for making, sharing, and delivering creative work centered on the newest release of CS6, which was also released this week.
“In two years, we aim to reach 50% of total revenue coming from cloud services,” Fabio Sambugaro, Adobe Brazil’s country manager. “In the long term, we want to have about 80%-90% of our business coming from could services.”
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The change might take a while and it may even represent a loss in the sort term. Nevertheless, in the long term, it will allow company to switch the nature of its financial basis toward recurring billing. “The cloud model is more expensive due to data centers costs, but it addresses more advantages for our partners and customers,” said Sambugaro.
In 2010, Adobe unveiled its goal to reach US$ 5 billion in revenues over the next two years. Adobe’s prior fiscal year revenue was about US$ 4.2 billion. Moving to the cloud will be one way for Adobe to achieve more revenue; another will be by expanding its digital marketing tools, Sambugaro said. Today, Adobe’s portfolio relies on digital media and marketing solutions. Media products account for the largest share of its revenue at 80%, but the company is looking to digital marketing suites to boost sales.
“We are getting away from the creative niches to reach all segments — enterprises that require information analysis and/or have an online presence are targeted by this suite,” said Sambugaro, during a press conference on April 24 about Adobe Creative Cloud and CS6 launches in Brazil.
The company has performed trials and unveiled some cloud services since 2005, but nothing compared to the plans Adobe disclosed this week.
Adobe Creative Cloud membership provides users with access to download and install every new Adobe CS6 application and two new HTML5 products, Adobe Muse and Adobe Edge preview. It integrates Adobe’s creative tablet applications, such as Photoshop Touch, into everyday work.
Moving to a cloud-based business model, Adobe aims to grantee recurring revenues and attract new clients. Mostly in emerging markets, the percentage of firms and professionals using non-licensed software programs are huge. Converting this population to paying customers is certainly among Adobe’s targets.
“Now there is no need to buy an entire license if you just want to use the program for one purpose or a limited period,” explained Sambugaro. “Under a monthly payment plan, if clients do not want to pay (and use) the software anymore, they just have to quit it. I believe we will increase client base, adding more subscribers.”
Package costs change from country to country. Adobe Creative Suite 6 products and Adobe Creative Cloud are scheduled to be available within 30 days and can be pre-ordered now. Adobe Creative Cloud membership will be available to customers in 36 countries and in multiple languages.
In the United States, for example, pricing for Creative Cloud membership for individuals is US$49.99 per month based on annual membership and US$74.99 per month for month-to-month membership. A special introductory offer of US$29.99 per month for CS3, CS4, CS5 and CS5.5 individual customers is also available.
Adobe continues to offer its traditional 14 CS6 point-products as well as Adobe Creative Suite 6 Design and Web Premium (US$1,899), Adobe Creative Suite 6 Design Standard (US$1,299), Adobe Creative Suite 6 Production Premium (US$1,899), and Adobe Creative Suite 6 Master Collection (US$2,599) for purchase. Upgrade pricing is also available to eligible customers.
Hiring in Brazilian operations
“Brazil has definitely entered into Adobe’s road map,” noted country manager Fabio Sambugaro. The company expects to grow 30% in 2012 over 2011, which is more than the 25% growth of 2010 and 2011. In addition, the firm is hiring ten more people to add to its current 30 local employees.
Sambugaro said Brazil figures in the top 5 when it comes to digital relevance, due to its growth of digital marketing and the country’s popularity in social media networks.
