Adobe’s cloud plans: most customers will migrate, pay more, get more

I’ve been listening to some of the sessions from Adobe’s Financial Analyst meeting in New York City yesterday. Since this event was focused on financials, Adobe talked in detail about how it intends not only to win its customers over to a cloud model, but also to make more revenue from them. I found it fascinating.

First, a little background. Adobe announced its Creative Cloud at the MAX event in Los Angeles last month. I was there, and while it was obvious that the announcement was significant, I did not appreciate until yesterday how profoundly the company is changing its business model.

Adobe has its own take on what cloud computing means. There are no plans for Creative Suite – which bundles products including Photoshop, Dreamweaver, Flash and Premier Pro – to become software as a service in the manner of Google Apps or Salesforce.com. Rather, the Creative Cloud is primarily two things:

1. A new purchase model for Creative Suite and associated tablet apps, based on subscription rather than perpetual licencing.

2. A set of cloud-based services which extend the features of the desktop applications. These services include storage of your projects, synchronisation across different desktop PCs and mobile devices, font licensing, digital publishing, analytics, and website building.

There is also a community aspect. I grabbed a screen from one of the presentations, and on the right you can see that the customer has a Twitter-style “followed” and “following” count, as well as status activity reported.

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In the main part of the screen, you can see the desktop apps she has installed “on this machine” – implying some link between cloud and local machine – tools “you do not have yet” which can be installed from the cloud, and a set of Android and Apple iOS touch apps also marked “click to install”.

One thing Adobe made clear to its analysts is its intention that all its Creative Suite customers will eventually move to the Creative Cloud, and that the majority of its Creative Suite business will be cloud subscription within 4 years.

Why will you move? Well, Adobe is going to reserve some benefits for subscription customers. During the Q&A at the end of the day, the execs were asked whether Adobe Edge and Muse will be in Creative Suite 6, the next major version. Edge is for designing HTML 5 animations, while Muse is for building web sites without writing code. This is what Senior VP David Wadhwani said:

We’ve announced they will be available in the CS6 timeframe. They will be available as point products, as subscriptions, and in the Creative Cloud. Our current thinking is not that we’ll be adding them to Creative Suite. Creative Cloud is what we believe adds more value to our customers and we want to continue to drive people in that direction.

It is not just adding value to customers though, it is adding value to Adobe as well. Adobe presented figures which spell this out (it was a financial meeting, remember). The example was CS 5.5 Design Premium.

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