Adobe CEO Shantanu Narayen went out of his way to avoid journalist's questions regarding the company's higher product pricing in Australia during a press conference in Sydney on Thursday. Mr. Narayen's evasion sent two strong messages: We don't need to justify our pricing in Australia, and we're forcing all designers to use Creative Cloud.
Adobe CEO: Creative Cloud is your future
Mr. Narayen traveled to Australia to celebrate the opening of Adobe's new offices in Sydney. The press event for the opening turned to questions about Adobe's product pricing in the country and a government inquiry into the practice, which Mr. Narayen should've been prepared to answer.
When asked by Delimiter about Adobe's Creative Suite pricing, which is US$1,400 higher in Australia than in the United States, Mr. Narayen didn't answer and instead talked about Creative Cloud -- the company's subscription service for Creative Suite apps such as Photoshop, InDesign, and Illustrator.
"When we look at the Creative Cloud, and where the future of the Creative Cloud is, and the future of where we're headed with the company, we think that's the best offering for customers," Mr. Narayen said.
When asked why he wasn't answering direct questions about the company's pricing policies in Australia, he responded,
Again, the Creative Cloud — I think it's important to remember that the Creative Cloud is not just for individuals. We recently announced the Creative Cloud for teams, we think that the collaboration features that you have, with Creative Cloud for teams is the better opportunity even for teams, and for enterprises, when you think of the combination of what we're doing with the Creative Cloud and the Marketing Cloud.
Every time he was asked again about local product pricing, or why he was evading the question, Mr. Narayen responded with comments about Creative Cloud and ultimately made a very strong statement that may not have been his goal.
Through his deflection, Mr. Narayen implied that Adobe will charge what it pleases for products -- a move the company is well within its rights to do -- and that it doesn't see a need to justify price variation to customers. In the case of Creative Suite, that variation amounts to an extra $1,400 in some cases even though the software package can be delivered as a download instead of on disc.
That price difference seems somewhat lopsided considering Adobe's ability to deliver the package electronically, and Mr. Narayen didn't have a reasonable response like "We don't want to undercut our local channel partners, so we're matching their prices." In fact, he didn't offer any answer at all. Instead, he chose to focus on Creative Cloud.
Creative Cloud does offer some benefits such as always up to date software and a monthly fee that's more affordable for many designers. Some designers, however, are turned off by the Creative Cloud idea since they'll have to pay for their software in perpetuity to be able to access their documents instead of paying a lump sum for the software package.
Ultimately, selling the Creative Suite as a subscription makes more money for Adobe thanks to monthly recurring payments, and it's clear that's where Adobe wants all of its customers. Mr. Narayen drove that point home when he told reporters that Creative Cloud is the future of the company and the graphic design market.
That's actually the bigger message Mr. Narayen delivered today: We are killing our pay-once-use-always business model and pushing all of our customers into software subscriptions. That's a big deal for design firms that rely on freezing their update cycle to ensure app and file format compatibility, and especially for companies that rely on plug-ins for their design workflow. Adobe updates can break plug-in compatibility, and in turn that can leave a design workflow dead in the water.
Based on Adobe's push when Creative Suite 6 launched and Mr. Narayen's comments in Sydney today, I'm standing by my prediction: Adobe will drop the traditional pay once business model for its apps in two years and push all of its customers to subscribe to Creative Cloud.
That change won't stop customers from continuing to use the Adobe software packages they already purchased, but they'll eventually find their apps are unsupported and will have to make the move to Creative Cloud, and that's exactly where the company wants all of its customers.
[Some image elements courtesy Shutterstock]