Bad things ahead with Adobe?

keylight

keylight

Veteran
It's no secret that Adobe would like its user base away from the annual (or biennial as is the case for many of us) upgrades to a monthly subscription model. But are they planning to do more than encourage a shift? Are they planning to actually phase out product versions all together?

From yesterday's earnings call. Shantanu Narayen, CEO of Adobe:

In conjunction with our upcoming Creative Suite release, we will launch Adobe Creative Cloud, which will transform the creative process. Creative Cloud includes all of our key CS desktop products, web services such as online storage, Typekit for online fonts, Business Catalyst for website hosting e-commerce, connectivity with our new touch apps and powerful collaboration and social community features. With the subscription model, Creative Cloud users will also get frequent product updates and access to new, innovative solutions, such as Edge and Muse, for HTML5 content creation.

We believe Creative Cloud will transform our business model and drive higher revenue growth over time. This will happen through an expansion of our customer base by acquiring new users through a lower cost of entry as well as keeping existing customers current on our latest release. Success with this model will drive our revenue to be more recurring and predictable. We will continue to offer the perpetual licensing model as we transition our customers to this new subscription model.
Click to expand...
(Emphasis Added)

Granted, he says they will continue to offer the perpetual licensing model, but then qualifies it with, "as we transition our customers to this new subscription model". IMO, this should set off alarm bells to everyone who buys Adobe products.

The subscription model is MUCH more expensive than upgrading. There was a thread on the cost of purchasing vs subscribing about a year ago here. I put up these charts as a part of that discussion:

Already Own + Every Upgrade VS Annual Subsctiption @ $85/month:

adobe-current.jpg


Buy New + Every Upgrade VS Annual Subsctiption @ $85/month:

adobe-chart.jpg


Buy New + Skip every other Upgrade VS Annual Subsctiption @ $85/month:

adobe-skip-new.jpg


Already Own + Skip every other Upgrade VS Annual Subsctiption @ $85/month:

adobe-skip-existing.jpg

Charts based These charts were based on Adobe's average of releasing a full upgrade every 16 months. The CS5.5 half release comes 13 months after CS5, so they may be switching to a 24 month cycle. The "Skip every other" charts take into account that it costs $200 more to upgrade if you skip one version.

SNIP

Another thought. You can sell and transfer your purchased license later. So that $1500 CS5 you bought and are no longer using, you can easily sell it for $800-900. After all, no one is forcing you to keep it. Don't assume you have to keep the software. :)

You can't do that with a subscription.
Click to expand...
 
Adobe has said that Creative Cloud subscriptions will start at $49.00 a month with a one year commitment. For that you will get full access to ALL of their desk top software products and online services, not just the various CS apps. You can start and stop subscriptions so if you don't use the software for a period of time you don't pay anything. Seems like a raging good deal to me considering you would have to subscribe continuously for four years to pay the purchase cost of the full up CS Master Suite and you would have to go 4 years with no upgrades on the purchase to match the subscription cost. Plus they will not wait to package new developments into major updates, you can get them as soon as they are ready. Latest and greatest versions of any or all of their software for less than about 2 bucks a day for as long as you want to use it, not a dollar more when you don't and no big cash outlay up front.

http://www.adobe.com/products/creativecloud.html
 
Last edited:
I admit to not knowing much about this new system, but for those of us that have already paid for the 'full up CS Master Suite', where is the incentive to pay an additional 49/month?
 
Razz16mm said:
Adobe has said that Creative Cloud subscriptions will start at $49.00 a month with a one year commitment. For that you will get full access to ALL of their desk top software products and online services, not just the various CS apps. You can start and stop subscriptions so if you don't use the software for a period of time you don't pay anything. Seems like a raging good deal to me considering you would have to subscribe continuously for four years to pay the purchase cost of the full up CS Master Suite and you would have to go 4 years with no upgrades on the purchase to match the subscription cost. Plus they will not wait to package new developments into major updates, you can get them as soon as they are ready.

http://www.adobe.com/products/creativecloud.html
Click to expand...

I think you might have misinterpreted what they've written. When they say "start at $49.00 a month" that means the price will end at some higher price. But if they are giving you full access to ALL of their desk top software products and online services for a single price, then they wouldn't say "start at". So is pretty clear that $49 will be the cost of the cloud subscription with access to a single desktop application, not multiple applications.

For example, you can currently get Photoshop Extended as a subscription for... $588/year (purchased annually) or $75/month (purchased monthly). What we should expect to see is something like this (this is only a guess on my part):

Any 1 desktop product + cloud apps - $49/month ($588/annually) OR $75/month (non-annual)
Any 2 desktop products + cloud apps - $79/month ($948/annually) OR $125/month (non-annual)

Adobe used to offer subscriptions for running all the CS products, but they've stopped doing that. Their site now reads:

[SUP]Note:[/SUP] Adobe has discontinued new subscriptions to suite editions of Creative Suite to focus efforts on delivering the new Adobe Creative Cloud™ subscription offering in the first half of 2012. Creative Cloud will give you access to all CS applications, plus Adobe Touch Apps, services, and more, starting at an affordable monthly price.
Click to expand...

There those words are again, "starting at" - which means they'll be offering a range of options at a range of prices, with the $49 offering giving you a lot less than than ALL. You'll still have "access" to ALL the applications and they'll let you upgrade to a more expensive subscription plan that includes more applications. They might even let you change which programs you want to subscribe to use as part of the annual subscription - but that almost certainly wouldn't be an "on the fly" change; more likely they would let you change programs once a month. (Note that under a monthly plan you can obviously do this, so why not let annual plan users do this?)


Terry_Lasater said:
I admit to not knowing much about this new system, but for those of us that have already paid for the 'full up CS Master Suite', where is the incentive to pay an additional 49/month?
Click to expand...

You make a good point and there really won't be any incentive to pay an additional $49. I suppose it is *possible* they'll could offer people who buy instead of subscribe, some kind of discount as a part of their purchase. But more likely they'll use it as leverage to, "transition our customers to this new subscription model."
 
Last edited:
The way I read it, annual membership subscription will be $49.00/month for an individual license. You will pay more if you do it on a month to month or short term basis. Membership gets you full access to everything. Some services like extra cloud storage over 20TB, multiple site licenses or web site hosting would cost more.

Obviously if you already own the software there would be no advantage to subscribing unless you wanted the other cloud services, and ongoing updates. The website says they will continue the traditional sales model too. But as fast as hardware and software change these days, subscription with a low entry cost seems like a good model to me.
 
Razz16mm said:
The way I read it, annual membership subscription will be $49.00/month for an individual license. You will pay more if you do it on a month to month or short term basis. Membership gets you full access to everything. Some services like extra cloud storage over 20TB, multiple site licenses or web site hosting would cost more.

Obviously if you already own the software there would be no advantage to subscribing unless you wanted the other cloud services, and ongoing updates. The website says they will continue the traditional sales model too. But as fast as hardware and software change these days, subscription with a low entry cost seems like a good model to me.
Click to expand...

I guess we'll know soon enough, but I can't imagine why they would (or how they could) give you what is essentially their Master Collection plus the new web apps, plus storage and other stuff that goes with the cloud, for $588 annually. Right now Master Collection costs $2599 for a new license. A 1/2 version upgrade costs $549 and full version costs, well that's hard to say. To go from CS4 to CS 5.5 is $949. When they release CS6 we'll see what it costs to go from 5 to 6. I'm going to predict it'll be $899 (I seem to recall that's what previous full version upgrades cost, but if someone remembers differently, please let me know).

Still, any way you slice it, the subscription model is a huge price increase over outright ownership, for all current owners. For new customers, it might make a little more sense, IF adobe really is giving you the whole collection for $49/month.

Hey - I hope I'm wrong, but looking at the numbers from Adobe's perspective, I don't see how they can give you MC for $49/month.
 
keylight said:
I guess we'll know soon enough, but I can't imagine why they would (or how they could) give you what is essentially their Master Collection plus the new web apps, plus storage and other stuff that goes with the cloud, for $588 annually. Right now Master Collection costs $2599 for a new license. A 1/2 version upgrade costs $549 and full version costs, well that's hard to say. To go from CS4 to CS 5.5 is $949. When they release CS6 we'll see what it costs to go from 5 to 6. I'm going to predict it'll be $899 (I seem to recall that's what previous full version upgrades cost, but if someone remembers differently, please let me know).

Still, any way you slice it, the subscription model is a huge price increase over outright ownership, for all current owners. For new customers, it might make a little more sense, IF adobe really is giving you the whole collection for $49/month.

Hey - I hope I'm wrong, but looking at the numbers from Adobe's perspective, I don't see how they can give you MC for $49/month.
Click to expand...

How many more sales will they get from people who could not afford to purchase outright? If a major upgrade exceeds the cost of the subscription, why would you not subscribe instead?
Lightworks is taking a similar approach: free open source basic version, annual low cost fee for more features and pro codecs. Higher cost subscription options for support.
 
As usual, the market will determine wether or not this model is successful.

If enough people don't buy their cloud subscription model, it will go nowhere.

I don't see the problem.
 
mcgeedigital said:
As usual, the market will determine wether or not this model is successful.

If enough people don't buy their cloud subscription model, it will go nowhere.

I don't see the problem.
Click to expand...

Bingo, this is something capitalism is good at. See Netflix's recent history for another example. If it works, it'll stay. If not, they'll toss it. It's not like Adobe will ruin themselves forever.
 
Hmmm...

I think this is more for guys that use their publishing, print and web design software, Photoshop and all their cloud services.
Cloud service would not make sense for editing in Premiere or working with After Effects. To much data, too less speed.
NLE implementation, from hardware to software and hand massaged OS, is critical for stability and performance - we all know that.
So the "work everywhere you are - on every computer" mantra does not apply here.
Do you want to sit in an Internet cafe in Timbuktu and edit 4k material in the cloud on a 5 year old $250 computer?
Also a lot of guys (including me) are anal about, having an NLE workstation NOT connected to the Internet.

Frank
 
mcgeedigital said:
As usual, the market will determine wether or not this model is successful.

If enough people don't buy their cloud subscription model, it will go nowhere.

I don't see the problem.
Click to expand...

About the fair market in this instance:
For those of us in the graphics biz, we would be forced to buy into the model since adobe is a monopoly. It's not like we have viable options to Photoshop, Illustrator and InDesign. We had options years ago but Adobe bought everybody out.
 
Sneakle said:
About the fair market in this instance:
For those of us in the graphics biz, we would be forced to buy into the model since adobe is a monopoly. It's not like we have viable options to Photoshop, Illustrator and InDesign. We had options years ago but Adobe bought everybody out.
Click to expand...

It's not ideal, of course, but what we were saying is that if everyone stuck to the older version with the traditional pricing Adobe would be forced to capitulate. I don't think it would take long for them to figure out that people hate it. This is assuming, of course, that the majority would dislike it.
 
Postmaster said:
Hmmm...

I think this is more for guys that use their publishing, print and web design software, Photoshop and all their cloud services.
Cloud service would not make sense for editing in Premiere or working with After Effects. To much data, too less speed.
NLE implementation, from hardware to software and hand massaged OS, is critical for stability and performance - we all know that.
So the "work everywhere you are - on every computer" mantra does not apply here.
Do you want to sit in an Internet cafe in Timbuktu and edit 4k material in the cloud on a 5 year old $250 computer?
Also a lot of guys (including me) are anal about, having an NLE workstation NOT connected to the Internet.

Frank
Click to expand...

The CS software is downloaded and installed on your local machine in the normal manner. Probably have to maintain an internet connection for the license, but it doesn't necessarily change the way you work otherwise. I would not use cloud storage for directly editing footage, but it could be useful for groups of people, editors, colorists, sound mixers, working on a project from different locations to share the same project files and keep them updated at one central location.
 
Jester2138 said:
It's not ideal, of course, but what we were saying is that if everyone stuck to the older version with the traditional pricing Adobe would be forced to capitulate. I don't think it would take long for them to figure out that people hate it. This is assuming, of course, that the majority would dislike it.
Click to expand...

What's to stop Adobe from saying CS6 is the last version they'll sell outright and all future updates will come only via cloud subscriptions? When Adobe iterates enough new features and improvements, people who want to upgrade beyond CS6 will be forced to subscribe in order to get them.

Granted, this won't get everyone to subscribe right away (in the same way that not everyone on CS5 or CS5.5 will upgrade to CS6) but over time people will have to....

That's the problem with the Monopoly Adobe has in this market. It's why I'm glad Avid is around on the video side. And although I don't care to use it, FCPX too.
 
+1 for Frank (postmaster), although it may be an attempt to curb piracy too.
 
Last edited:
You must log in or register to reply here.
Back
Top