Adobe: Pay What We Say & Use Creative Cloud

| Analysis

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 futureAdobe 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]

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13 Comments Leave Your Own

Lee Dronick

I have no interest in relying on the app being in the cloud, I want to work when there is no internet available. I am thinking that it might be an appropriate time to review some Creative Suite app alternatives. 

Currently I am using Pages instead of inDesign and Coda instead of DreamWeaver. I am looking for applications to replace PhotoShop and Illustrator. I also use and very much like Aperture.

geoduck

GIMP is supposed to be a decent, if a bit clunkier, alternative to Photoshop. I’ve used GIMP and like it but have not used Photoshop (OK I know I’m likely the only person on the planet that can say that) so I can’t compare directly.

Warren D. Lee

Jeff, I think that the new creative cloud pricing that is available in Australia represents a discount and actually does address the pricing concerns, no?

Lee. I am a creative cloud member. I think you will be glad to learn that while the Adobe Creative Cloud is called cloud software, it is actually a little bit of a misnomer because you do not need to be logged into the internet in order to use the software. It is kind of cloud based in that while I am logged in then I am able to take advantage of new updates and features as they are released, and also there are some cloud based content storage features, and some cloud based workflow features for sharing files. But all in all, dont need to be online to use.

Lee Dronick

Thanks for that info Warren.

I am still wanting to wean myself completely off of Creative Suite, I am running CS4 under Snow Leopard and have some problems with that. I have been looking at some of the vector drawing programs in the App Store. They are reasonably priced, but often you get what you pay for. On the other hand you often pay too much for what you get.

xmattingly

Adobe’s mouthpiece says “creative cloud”, and all I hear is an excuse for a never-ending billing cycle for mostly useless new features and bug fixes. What they’re eliminating is customer options in favor of their bottom line.

Thankfully, even though they’re pretty hard of hearing these days, they still listen to customers if they scream loud enough. Remember that flap a year ago when they dropped the bombshell that - the only way you could buy an upgrade to CS 6 was if you had CS 5 - where traditionally they had tiered pricing for 2 or 3 prior versions? If you recall, they grudgingly backed off of that scheme.

So I don’t know that they will successfully force Creative Cloud on the bulk of their customers in the near future; I’m not hearing much noise that the market is really demanding it. Adobe is clearly not in tune with their customer base and they haven’t been for some time.

Bob

Warren, you say Adobe is free to charge whatever they want for their software…maybe not. Aren’t there anti- gouging laws? And, Australia’s laws are different than ours. I doubt if either of us are up on Australia’s laws.

Finally, those are pretty lame answers from the CEO. Worse tan politicians, recently. Are they taken out of context? Is the Creative Cloud priced the same Down Under as it is in the US? Is that why he kept referring to it? If not, the man is an idiot.

Edward Stern

Hopefully this will open the door for new developers to enter the field I am tired of adobe’s monopoly. being cloud based based only brings up a whole host of problems. What happens when you have internet problems and how do you work offline. The updates they offer at this point are minor, they have run out of ideas so now all they can do is find ways to milk exciting clients. Apple is going in the same direction, look at the new iMacs no way to do internal upgrades to hard drives and memory in the 21 inch models. If your imac breaks just toss it and buy an new one.

Lee Dronick

Edward, according to Warren the current Creative Cloud does not mean that the apps are in the cloud, they are local. However, that is what I thought and Adobe probably could have done a better job explaining Creative Cloud. Either that or I ignored what they are saying because I decided I was going to leave Creative Suite. My Macs last longer than Creative Suite versions and apps from App Store don’t seem to break when there is a new version of OSX.

I am looking at several replacements for Illustrator.  iDraw (not an Apple app) seems that it might fill my bill http://www.indeeo.com/idraw/

KitsuneStudios

Lee: Heh, I just wish I could find a drawing tool to replace Flash!

I love being able to paint pressure-sensitive vector lines, but Flash’s paintbrush tool actually got less accurate and messier with every generation since Flash 4. The only alternative I’ve found is Toon Boom Animate, which ain’t cheap.

JJR

“being cloud based based only brings up a whole host of problems. What happens when you have internet problems and how do you work offline”

@Edward,  Lee is right - it doesn’t run over the network, that seems to be a misconception… and they do need to do a better job of explaining - see

http://prodesigntools.com/adobe-creative-cloud-myths.html

Edward Stern

@JJR So Adobe is moving to the cable TV model of generating revenue.  In the current model big shops buy an app then hold on to it until they think they need to upgrade., now adobe will force them to be paying forever for an app they may not care about updating, sounds more like the mafia than free enterprise. Why not be like Apple and charge $29 per year for the OS Upgrades. Even Apple dropped the price or their server software to $19 which used to cost $1000

-hh

Ultimately, what the software subscription business model does is to curtail their own growth, as the small & developing businesses will be obligated to use other tools and when they do grow, these alternatives will grow too ... They’ll not have a business need to “move up” to Adobe.

As a small business, I know that it will be cheaper for me to keep a legacy PC around to run CS8 than to pony up for a monthly fee.

-hh

SamuraiArtGuy

Adobe has become the 800-lb gorilla of Design and Publishing ever since they ate Macromedia and removed their most credible competition. In the design world you pretty much MUST own some flavor of Creative Suite to be professionally relevant. While I like and use pages, they can’t open inDesign Files. I am dragging my heels with CS5.5 till i get sent a file I can’t OPEN.

I am conflicted about Creative Cloud, and since I do more web than print design, there are a number of attractive products and services. But taking their cue from the Cable and Telecom Providers, the most hated companies in the world is not endearing to me. While there is am attractive discount for CS users, but that goes away after a year. after which the ride becomes $50/Month, or $600 for the year. - That’s in the US anyway. What are the Aussies going to be stuck for?

But without credible, file-compatible competition in the core apps, Adobe has us all by the short and curlies.

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