Profits Plummet For Adobe

Adobe deciding to stop releasing its Creative Suite products every two years in favour of a Cloud solution was never going to be without consequences. This basically means that its faithful customers now have to pay for a monthly deal instead, and they wonder why their sales haven’t quite been up to scratch.

The thinking behind it was sound, more or less – why sell a product once, every two years, and watch sales drop after the first initial spike when you can make people pay for a product monthly, meaning continuous cash flow? Except it isn’t continuous cash flow, as Adobe have just reported a 46% year on year drop in net profits. Have people lost interest in Adobe’s Creative Cloud? Or do they not want to pay for something monthly that’s sort of like a library book; you never actually get a physical product to keep. 

Understandably this has made small businesses reluctant to convert to the new system. Graphic designers and other people reliant on these services have taken angrily to online forums to air their disapproval and fear of losing their work, with varying levels of success and eloquence. It’s not that Adobe haven’t been successful in shifting Enterprise clients across, it’s just that in doing so, they’ve had to massively slash their rates in a bid to lure in new users – students, teachers, photographers, and other individuals with a burning desire for Photoshop or other online apps.

For those who aren’t familiar with Adobe’s Creative Cloud, it’s basically a series of packages you can buy tailored for specific purposes, such as businesses or private use, containing creative apps and services such as Photoshop, Lightroom, Cloud storage, mobile apps, web fonts and ProSite portfolio websites. The intention is that you can work anywhere, laptops, desktops, tablets or mobile phones, with the materials that you most need. But before you could buy similar packages and have them, as yours. Now you cannot, though on the plus side they are updated more regularly than once in two years.

However, it’s not all doom and gloom. Adobe has signed up 2.8 million users, up from 2.3 million last quarter. Promising? The revenue is still down by 2%, which is another clear indication that they’ve had to lower their prices to get those users in the first place. They’ve tailor made new packages, the cheapest of which is a handy Photoshop and Lightroom combination for £8.78. ‘Great!’ you cry, then realise it’s that much a month. Fair enough if you need those products but wouldn’t you rather pay for it in a bulk and then actually own Photoshop? 

The business model is moving away from the sharp peaks and troughs in profits of the Creative Suite days, but is this a sustainable future for Adobe? Should we all just stop whining, get on with it and embrace the updates?

What do you reckon? Let us know @mygeex