Adobe's Success in the Age of Digital Content
In the 1980s Adobe Systems gained its fame by selling premium design software, including the vector-based drawing program Illustrator as well as Photoshop. This high-end software was geared towards design professionals who were creating top-of-the-line print media. Today Adobe retains its exalted role in the design space with its subscription-based Creative Cloud platform that provides print, web, video, and mobile design software for design professionals. In addition it has made significant inroads in both the consumer design market as well as the enterprise marketing space. Adobe is obviously a company with staying power; a business that succeeds by continuously reimagining its strategy.
This success is evident in Adobe’s recent fiscal first-quarter results in which it reported a 22% year-over year revenue gain overall, with 29% gain in its Creative Cloud products. This gain follows multiple successive quarters of substantial revenue growth.
Subscription-based Products Reach New Consumers
The foundation of Adobe’s success has always been its loyal base of creative professionals and students, including graphic designers, web designers, web developers, video creators, and mobile app developers, who have been purchasing Adobe design software as a matter of course ever since Adobe was founded over three decades ago. According to Morningstar, Adobe currently controls 60% of the graphics and image editing market as well as 45% of the digital video editing market. Adobe Creative Cloud skills are a standard for design professionals; a requirement for many jobs.
Recently Adobe has been transitioning from traditional software licensing to subscription-based Cloud licensing. The new subscription-based model opens the doors to a large number of general public consumers who in the past might have been scared off by the price tag (several hundreds of dollars or more for each standalone software license). These new subscription users can now afford the inexpensive monthly rate for the software package of their choice that includes web/mobile apps. For photographers there is an economical $10 per month subscription rate for its Photography package. Or for those who want access to the entire Creative Cloud software package (including Illustrator for drawing and Premiere Pro for video editing as well as other design software) the monthly rate goes up to $50. Adobe also offers comparable affordable packages for business users and teams.
New Creators of Digital Content
Adobe has also benefited from the phenomenal growth in demand for “digital content” across print, web, and mobile devices. Many of us are part of an expanding group of professionals and amateurs alike who have become avid digital content creators. Whether we are creative professionals, students, small businesses owners, or avid Facebook/Twitter users, the goal is the same: to constantly search for something new to report on, dream up interesting social media posts, take lots and lots of photos, and create videos to post to our favorite social media sites. On a daily basis we are creating a wide variety of digital content in the effort to communicate; to build a personal/corporate brand; and to keep in touch with family and friends.
Thanks to Adobe’s new subscription-based model, for many professional designers and consumers Adobe Creative Cloud is their software of choice for creating and perfecting their finalized digital creations.
Beyond Design to the Marketing Cloud
In addition to growing its customer base beyond professional designers to consumers, Adobe has also managed to break into the enterprise market. With its Marketing Cloud software, Adobe has gained significant market share in the enterprise marketing, advertising, and analytics space, which includes formidable competitors like Salesforce, Oracle, and IBM.
In its most recent quarter, Adobe Marketing Cloud revenue grew at an annual rate of 23%. Recently Adobe acquired video advertising company TubeMogul, thereby adding new features for enterprise customers that are increasingly moving towards video advertising. Adobe has also recently expanded its enterprise CRM features by partnering with Microsoft to provide a set of joint CRM offerings.
The Story Continues: Cloud Development Partnerships
Adobe is also working diligently to strengthen its cloud development environment. At the recent Adobe Summit it rolled out several developer enhancements to Adobe I/O, its cross-cloud developer portal. It also unveiled plans to partner with Microsoft and others to establish unified coding standards for enterprise cloud developers. This standardization will facilitate collaboration among cloud platform developers. In addition, Adobe recently announced that Marketing Cloud integrations developed by partners such as MasterCard and SapientRazorfish will be available to other cloud development partners on the Adobe Exchange.
Future Prospects: Creative Cloud and Marketing Cloud
Going forward the prospects for Adobe seem at first extremely positive, considering the continued popularity of its Creative Cloud software and Adobe’s successful strategy of expanding its customer base beyond design professionals. On the other hand, the Marketing Cloud market remains highly competitive, with companies like Salesforce, Oracle, and IBM constantly increasing their product lines through a combination of organic growth and acquisitions. Adobe will have to continue to innovate, build its product offerings, and expand its partnerships if it wants to maintain its competitive advantage in the enterprise market.