In a major shift for its business and customers, Adobe Systems announced that it will no longer will sell its Creative Suite (CS) software, as it moves instead to the AU$49.99 per month Creative Cloud and other subscription plans.
Adobe's Creative Cloud subscription includes software, services and tools for social networking and collaboration.
(Credit: Adobe Systems)
"We have no current plans to release another perpetual release of the CS tools and suites. Creative Cloud is going to be our sole focus moving forward," said Scott Morris, senior director of product marketing for Creative Cloud.
When Adobe launched its Creative Cloud subscription last year, executives weren't sure how long it would offer it alongside the traditional perpetual-licence sales for its software. But customer enthusiasm for the Creative Cloud, combined with the awkwardness of maintaining it alongside the slower-moving CS products, led the company to move aggressively to the subscription plan.
"We expected it to be a couple years before this happened. But we were surprised by how successful Creative Cloud has been," Morris said. "We know that's going to be a difficult transition for some customers, but we think it's going to be the best move in the long haul."
It's not just a big difference for customers. With the change, Adobe moves its business more to a recurring-revenue approach. Instead of revenue surging when upgrades such as CS6 arrive, the company will get a steady stream of money.
"There's a stacking effect. When we bring customers in, they stay in. Then when we bring in new customers, we layer the revenue on top," Morris said. "Recurring revenue is going to help Adobe in the long run. That's one reason Wall Street responded very positively."
The company announced the change at its Adobe Max conference, along with major updates to its software — the programs that would have borne the CS7 logo, but will now be rebranded just as CC. Adobe's new CC software includes a version of Photoshop that can correct some camera shake in photos, of Illustrator that can let designers edit elements with multi-touch devices, of InDesign that now supports high-resolution monitors like Apple's Retina displays and the new Refine Edge tool for selecting particular regions of video in After Effects.
For full details, check out CNET's complete Adobe CC product news.
What is Creative Cloud?
The Creative Cloud grants access to all the software in the full Creative Suite; newer products such as Muse and Edge Animation for web developers and Lightroom for photo editing and cataloguing; and services for activities including file sharing, collaborating and web publishing.
The subscription costs AU$49.99 per month for those who sign up for a year's commitment, though Adobe has discounted the monthly price to AU$29.99 for those with earlier versions of CS, and has just added an AU$20 price for those with the newest CS6 version that Adobe released last year.
"Customers who invested last year in a perpetual licence might feel their upgrade path was taken away from them, so we'll be giving them a screaming deal," Morris said.
There are also other subscription plans. For AU$69.99 a month, Adobe offers the Team version for businesses with multiple employees using the software.
For those who don't want the entire suite, Adobe offers subscriptions to individual programs.
The shift to subscription pricing has been gradually spreading across the computing industry as the internet has simplified software distribution. Early pioneers such as Red Hat argued that customers are better off with a steady stream of payments that gets them a steady stream of updates.
Now subscription pricing is spreading to software, such as Google Apps, Evernote and Dropbox, that is inextricably linked with online services. The shift is aided by pay-as-you-go infrastructure, such as Amazon Web Services (AWS), that lets companies use and pay for only as much computing power as they need.
Some people just do not like subscription pricing, and they'll have to make do with CS6, which Adobe will continue to sell, or with rival products. But those who've carped about the Creative Cloud are a minority, Morris said.
"Overwhelmingly, when you compare the people who've complained about the new model to the people who loved it, it definitely skewed heavily to the new model," he said. "Obviously, we would not be making a decision this big if the percentage of people in that category was so big it was the wrong thing for us to do."
One of the profound shifts for subscriptions is that software is typically continuously updated. With customers making steady payments, software makers can release steady improvements as they're ready, rather than holding them back until they're ready to release a major paid update. After all, the software makers want their customers to renew their subscriptions.
Adobe offers all its software products through the Creative Cloud subscription program.
The CC app overhaul that Adobe announced on Monday will arrive in customers' hands in coming weeks, but, after that, customers should stop expecting massive, across-the-board updates, Morris said. Features will arrive when they're done for the most part, though Adobe might synchronise some updates across related packages like After Effects and Premiere Pro, or align some release schedules for events like Adobe Max.
CS customers typically only bought a subset of Adobe's products. With the CC model, though, they get access to all the software. That means customers can try new software.
"We do know the average number of apps people download and install in CC. It's high," Morris said. And Adobe measurements show they're using the new apps, too, he added. "People are doing more with CC than they are with CS."
Some might fear that once they're signed up for Creative Cloud subscriptions, they're subject to Adobe's pricing whims. Buying perpetual licences for Adobe software has never been cheap, but customers knew they'd be able to use it without any unwelcome price-hike surprises.
Morris, though, assures customers that they need not fear Creative Cloud price hikes.
"One reason people were resistant to CC is they were afraid in year two we'd raise the price to US$100 a month," Morris said. "We have no intention of doing that. If we did that, we would completely lose everyone's trust and fail in what we're doing."
Of course, many of the customers signed up at the promotional AU$30 per month pricing for their first year. Might they abandon CC once their annual rates increase from AU$360 to AU$600?
"We've made it really clear to folks that you get the discounted price only for the first year," Morris said. "We're pretty confident that even when the price normalises at the AU$50 list price, most of these customers are going to stay."