Adobe faced 3 perilous marketing conundrums where almost all its sales options look like Lose-Lose More propositions. The first conundrum is the emergence of Freemium pricing where core app software is given away for free and money is made on add-ons, plugins, plus special editions. Freemium pricing has taken over the mobile world and will surely hit PC consumer software beyond its large presence in developer software already.
Second, the major 3 client OS vendors [Apple, Google, and Microsoft] with their App Stores not only take 30% of the selling price of all software sold but also control who and how software “qualifies” to be sold and within what price ranges. Apple’s App Store controls all sales of software for its iPhone, iPod, iPad, and other iOS powered devices. Apple would like to do the same for the Mac Store as would Google for its Play Store and Microsoft for its Windows Store. Finally, many software vendors face the problem of maturing product lines where new compelling features are harder to deliver while their products feature sets bloat and their core features are delivered by Open Source or Freeware. Adobe of course is not alone here among major consumer software vendors; but they are at the apex of danger. So how Adobe are responding will be widely watched in the consumer software industry.
These marketing challenges are potentially disastrous and market threatening. Adobe is a major consumer software vendor that has had to defend itself from the tyranny of not just Apple, Microsoft, and Google’s OS + App Store monopolies but also major switches in pricing and software packaging/distribution. But it is the OS vendor mopolies with their ability to impose almost arbitrary exclusions [Apple’s infamous Flash ban on iOS], OS API update dependencies or vulnerabilities [again, used in hampering Flash fixes in order to support Steve Job’s fraudulent Flash poor performance assertions] plus other OS vendor conflicts including features and pricing. On the OS App Store side, there are a host of problems starting with runtime gouging [all 3 vendors charge a 30% fee for software sold in their stores] but running the gamut of update timings and forced sharing of customer information with OS rival vendors especially Apple and Microsoft but increasingly Google as well.
So confronted with harball tactics from Apple plus emerging serious Flash rival software from Microsoft [Silverstream and the Exrpression family]Adobe had to do something to bolster Flash but also establish software sales independence. Hence the Creative Cloud – this provides some defense against the OS vendor App Stores but also cost Adobe users.
Adobe’s solution, the Creative Cloud, is equally Draconian, but now for Users
The Creative Cloud is the way Adobe now sells and updates the bulk of its software. Users no longer own an Adobe program but rather rent it on a monthly or annual basis. The monthly rent is higher than the annual rent by as much as 50%. If you don’t pay the rent at the end of the month or year, the Adobe software will no longer work until you pay up. Also the programs must be downloaded [and given some huge feature sets], these are multi-gigabyte downloads eating time and bandwidth.
Adobe has bundled its popular graphics software into groups like Web, Video, and Photo plans. These bundles have a cross over point of 2-3 programs over renting each individually. Adobe provides 20GB of cloudspace for each bundle but that cloud space becomes inaccessible except for 2GB if your rent is over due.
Finally user have to check in online every month to insure there rent is not due – this is done semi-automatically. Thankfully the Creative Cloud is not online dependent so most apps are capable of running offline most of the time.
Open Source Opportunity?
Given users overwhelming dissatisfaction with Adobe Creative Cloud subscription model, there appears to be an opportunity for Open Source and/or free graphics software vendors. But the continuing problem for both Open Source and free software vendors is establishing a healthy revenue stream to sustain their software development and support. As Linux Community has made abundantly clear[remember this is the largest number of potential users in this software sector], free and Open Source does not have a robust revenue stream that can support creative development ventures except by partially breaking theFree Foundation or Open Source mold as donations do not cover the rent.. The 6 most often used mold breaking methods are to:
1)charge more the a nominal fee for distribution and update services;
2)charge more than a nominal fee for support and education services;
3)piggyback other software on top of the free download for a fee;
4)offer quicker, directed updates for users who help pay for the cost of those feature developments;
5)adopt dual licensing allowing for a free core program but charging for full feature sets;
6)offering integration and/or consulting services for clients with special requirements.
Thus for the past 4-5 years it has been interesting to see how free and Open Source software sources are addressing their revenue problems while trying to sustain state of the art development as university and research funding becomes more frugal from both state and federal government cutbacks. So as monopoly infighting raises the prices and constrains the delivery of software feature sets, will free and Open Source be able to seize growth and presence opportunity?? If Linux failure to take advantage of the Microsoft Vista debacle is any guide, don’t expect too much from free and Open Source. GIMP , for example, is not a Photoshop killer.
This solution in which Adobe software is now sold like cable channels – in bundles and on an monthly charge but monthly or annual renewal basis – is disconcerting for both the OS vendors and Adobe users. The OS vendors have yet to follow the monthly billing model of Adobe so except for the iOS App Store they have not been able to enforce an exclusive buy from their App Stores on Adobe. End users get short changed because based on a 3-4 year update cycle the new prices represent a cost increase. Massive downloads and updates plus managing the cloud add further time burdens on end users. In sum the vaunted efficient, free markets become much more “sticky”, more expensive and sometimes arrogantly arbitrary. So in responding to the threat of OS vendor sales control, Adobe has setup a rental system that has many users up in arms; thus free and/or Open Source graphics software is looking more attractive.
Summary
So with its subscription model Adobe may be able to elude the clutches of the major OS App stores for the time being. And in the Creative Cloud has supplied the reverse of freemium – a few, minor free programs and services but certainly no core program. However as Apple makes GarageBand on iOS freemium with rumors of other core Apple programs going freemium too, Adobe has clearly not addressed the freemium nor free software challenges. For, example Art Weaver provides a Photoshop clone equivalent to say Photoshop 5 or 6 for free.
As well Adobe has an almost gerrymandered product line with core duplications and missing gaps among Indesign, Framemaker, and vestigial Pagemaker or Photoshop, Lightroom, Fireworks and Photoshop Elements. In a market moving towards simple, easy to use and well integrated – again Adobe faces real challenges. And not just Adobe- Autodesk, Sonic Foundry, Intuit are among consumer software vendors facing similar problems.
Bottom line, this is one loyal Adobe user that recognizes the sales and marketing challenges faced by the company; but is not happy at all with the current subscription pricing being offered by the company. A mixture of freemium and subscription pricing would appear to be a better model.
Freemium would allow rationalization among the overlapping software programs, counter the freeware and Apple intrusions, while providing free training wheels for the growing number of graphics program users. It appears Autodesk, determined to broaden the reach of its powerful stable of 3D Modeling software, may be more inclined to take advantage of freemium with mobile [its free Pixlr mobile editing software is super feature and performance rich] and 2D software offerings. So stay tuned. The year ahead for Adobe and graphics software in general – both features and pricing – will be most fascinating to watch.