Creative Suite subscriptions pay off as Adobe raises profit forecast

Posted:
in Mac Software edited January 2014
Adobe's move toward a subscription-based model appears to be paying off, as the Photoshop and Acrobat maker has raised its full-year adjusted earnings forecast, reporting first-quarter results that surpassed Wall Street estimates.

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Adobe's Creative Cloud, which launched last year with Creative Suite 6, allows members to subscribe to Creative Suite applications such as Photoshop, Illustrator, and Dreamweaver. Subscribers can access the content they create across a variety of devices, including iPhones and iPads. Adobe says its Creative Cloud subscriber tally now exceeds 500,000 paid individual members, with more than two million free and trial memberships.

In the first quarter, according to Reuters, Adobe added 153,000 net paid subscriptions. By the end of the year, Adobe expects to hit 1.25 million paid subscriptions.

Adobe's subscription revenue has more than doubled to $224.3 million. The move to subscriptions results in lower short-term revenue, since fees are collected on a monthly basis instead of in an upfront one-time payment.

Off the success of Creative Cloud, Adobe raised its full-year adjusted earnings forecast to $1.45 per share, up from $1.40 per share. Analysts had predicted about $1.41 per share. Adobe now forecasts full-year revenue of about $4.1 billion.

The positive financial news came on the same day that Adobe confirmed CTO Kevin Lynch's departure. Lynch will be moving to Apple, a company Lynch has previously clashed with over its refusal to include support for Adobe's Flash standard on the popular iOS platform, a stance that led to the virtual extinction of Flash on modern mobile platforms. Lynch will be joining Apple as a vice president of technology, reporting to senior vice president Bob Mansfield.
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Comments

  • Reply 1 of 34
    jungmarkjungmark Posts: 6,661member
    It's interesting. As much as Lynch deserves to be panned for Flash, you can't ignore this success.
  • Reply 2 of 34
    No kidding. It's well worth the price. My studio has upgraded every iteration, and even with volume discounts the cloud is much cheaper - also in the long run. And it's easier to manage.
  • Reply 3 of 34
    flabberflabber Posts: 100member


    It's still only cheaper if you, as a company, are used to upgrading with évery new version. Most companies don't work like that (sometimes unfortunately)… a lot of companies upgrade every other version, and for those companies a subscription of 40-50-60 bucks a month is simply not paying itself back. And most companies also simply don't nééd the latest and greatest.


     


    Plus, what if Adobe at one point in the future decides to discontinue a piece of software? You'll lose all hopes of ever running that piece of software on your computer. If you bought the piece of software you can run it as long as you want to (provided you keep a computer around that can run the software). :)

  • Reply 4 of 34
    You think $50. a month is cheaper? It's very good for corporate clients, but not at all good for artists or freelancers who may not have consistent money flow. Actually this whole cloud thing, and the exorbitant pricing on upgrades, really has me very grumpy about Adobe. It's like they've joined Avid in the realm of gougers.
  • Reply 5 of 34
    solipsismxsolipsismx Posts: 19,566member
    You think $50. a month is cheaper? It's very good for corporate clients, but not at all good for artists or freelancers who may not have consistent money flow. Actually this whole cloud thing, and the exorbitant pricing on upgrades, really has me very grumpy about Adobe. It's like they've joined Avid in the realm of gougers.

    It seems to me this is excellent for those that don't a consistent money flow. You don't have to invest $600 up front. You can do just $50 per month, or if you're a student just $30 per month. That's not even a night of drinking per month for a college student.

    On top of that they they also have the one-month option for $75 (not sure if there is a education version of that). If you have one job you can easily fold that $75 into your fee but trying to fold $600 into your fee or hoping your get more work down the road before you need to update again is much more risky.
  • Reply 6 of 34
    rcfarcfa Posts: 756member
    Adobe's "new" features are ever more questionable. Most upgrading I did with adobe products is due to their horrid compliance with platform standards that more or less required an upgrade for things that should have been part of a maintenance release.
    Their shitty software to this day isn't fully OS X compatible, not fully 64-bit capable, not Cocoa based, using non-standard UI, etc.

    Subscription based software allows them to consistently make money with even less care for the quality of their products.

    To hire anyone who's responsible for the long term lack of code quality of Macromedia and Adobe products is as huge a mistake for Apple as firing Forstall was a big positive move.

    Unless this dude tried to improve things at Adobe and was blocked by internal resistance and is happy to leave that crappy company, hiring him is a massive mistake.

    The last thing Apple needs is a guy who didn't do squat about the horrid code quality of Adobe/Macromedia products, and who might be co-responsible to sink the only good technical documentation software (FrameMaker) on the Mac, even though there was an excellent NeXTstep port that could have been used as a starting point for an OS X port many, many years ago.
  • Reply 7 of 34
    I prefer to pay more upfront and only buy a product once. I designed a site using Muse, but haven't updated it because it seems silly to pay $15 every time I need to change something small, so Adobe is forcing me to switch to Wordpress, so long.
  • Reply 8 of 34
    MarvinMarvin Posts: 14,209moderator
    You think $50. a month is cheaper? It's very good for corporate clients, but not at all good for artists or freelancers who may not have consistent money flow.

    Everybody needs a consistent money flow (like Adobe) otherwise you can't pay for food, rent, car, utilities etc. People are happy to pay $50/month for a cable subscription that (ignoring internet access) has no hope of earning you money. Paying $50/month for something you most likely should be making money from is more like a commission. You might get an $800 job one month and not the next but it's still a pretty fair amount to pay. They will have room to adjust pricing once they get enough people on board - perhaps they can have an Elements model for home use. When you divide it out, it's less than $2 a day, which you can easily drop into a vending machine or parking meter. You might not feel it's worth that but some people feel that way about their computer too and wouldn't spend $1500 to get 3 years use out of a laptop. If it's not worth the investment, there are alternatives. Final Cut, Motion, Pixelmator, inkscape, Coda etc will replace much of the functionality but they won't all work together quite so well. Companies offer options that support their business model and it seems to be working for Adobe.
    blowbot wrote:
    I designed a site using Muse, but haven't updated it because it seems silly to pay $15 every time I need to change something small, so Adobe is forcing me to switch to Wordpress, so long.

    How much did you pay for the standalone version of Muse?
  • Reply 9 of 34
    sockrolidsockrolid Posts: 2,788member


    Originally Posted by AppleInsider View Post



    Adobe's move toward a subscription-based model appears to be paying off


     


    Adobe: "How can we get people to pay us for software even if they don't upgrade?  YES!  Subscriptions!" 


     


     


     



    Originally Posted by AppleInsider View Post



    Lynch will be moving to Apple, a company Lynch has previously clashed with over its refusal to include support for Adobe's Flash standard on the popular iOS platform, a stance that led to the virtual extinction of Flash on modern mobile platforms.


     


    I've worked with Kevin Lynch, and he's a very, very smart guy.  Years ago, he worked on the Mac version of FrameMaker.  Long before Adobe acquired Frame Technology.  So he's always been a Mac advocate.  I'm sure he'll become an iOS advocate soon, if he isn't already.

  • Reply 10 of 34
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by flabber View Post


    Plus, what if Adobe at one point in the future decides to discontinue a piece of software? You'll lose all hopes of ever running that piece of software on your computer. If you bought the piece of software you can run it as long as you want to (provided you keep a computer around that can run the software). :)



    That's a good point which I had not considered although I could see Adobe just eliminating the subscription without killing the software on your computer. That would be the right thing to do. Fortunately we only use the hardcore applications that have been around for years and are not likely going away anytime soon.


     


    Quote:

    Originally Posted by SolipsismX View Post



    It seems to me this is excellent for those that don't a consistent money flow. You don't have to invest $600 up front. You can do just $50 per month, or if you're a student just $30 per month. That's not even a night of drinking per month for a college student.



    On top of that they they also have the one-month option for $75 (not sure if there is a education version of that). If you have one job you can easily fold that $75 into your fee but trying to fold $600 into your fee or hoping your get more work down the road before you need to update again is much more risky.


    The $600 dollar figure is not the price for the Master Suite upgrade. That would be $525, but if you have an older product or lower value suite the price shoots up significantly to over $1000 to upgrade to Master Collection edition. Design Standard is only $275. The $50 a month is for the complete Master Suite regardless of previous ownership.


     


    I got in on the $29 per month which was the initial offer for existing customers. Definitely worth it. 

  • Reply 11 of 34


    I got in on that early price too, but quickly cancelled because 1) the software did not work on my 2008 Mac Book Pro (the computer I use for my graphic work)  and when calling to get it fixed with tech support I encountered 2) horrid horrid horrid, waste-of-a-whole-day-with-no-solution tech support.


     


    All I use is AfterEffects, Photoshop and Illustrator.  I own earlier versions of several other programs which I use only peripherally.  I don't like the idea that if I go for more than a month without paying work (and if you are an artist, sometimes that does happen, I'm going on month 10 right now unfortunately) you have to keep paying to just use the software.  Mentioning that it's the amount spent on internet or parking means nothing to me, because I'm not going to be able to give those up in exchange for using my software.  Likewise, I'm not going to give up paying for food or my rent.  It's just an additional cost which I think is too high.


     


    It just makes much more sense to purchase software once at a REASONABLE price (reminder:  Logic Pro, an incredibly deep and sophisticated piece of professional software) costs 250. That's 100. less than what Adobe charged me to upgrade AfterEffects, a program that I have owned and upgraded for 15 years!)


     


    It wouldn't really bug me if the purchase price of their software (as well as upgrade prices) wasn't so insanely inflated, in fact, I think those prices are as high as they are to make the cloud upgrade seem a more attractive solution (at which point they've got you!)  

  • Reply 12 of 34

    Quote:

    Originally Posted by SockRolid View Post


     


    Adobe: "How can we get people to pay us for software even if they don't upgrade?  YES!  Subscriptions!" 


     


     


     


    I've worked with Kevin Lynch, and he's a very, very smart guy.  Years ago, he worked on the Mac version of FrameMaker.  Long before Adobe acquired Frame Technology.  So he's always been a Mac advocate.  I'm sure he'll become an iOS advocate soon, if he isn't already.



    So I take it then, that you think he's a good hire for Apple?

  • Reply 13 of 34
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by vincentagniello View Post


    All I use is AfterEffects, Photoshop and Illustrator.  I own earlier versions of several other programs which I use only peripherally.  I don't like the idea that if I go for more than a month without paying work (and if you are an artist, sometimes that does happen, I'm going on month 10 right now unfortunately) you have to keep paying to just use the software.  



    I'm not sure why you are having trouble running CS6 on 2008 MBP. I was running CS5 on my MBP 2007 just fine. You can subscribe on a month to month basis for any of the apps you mentioned for $29 each. That means if you don't have a paying job one month you don't have to pay for the subscription, although you can't use the app either.


     


    What OS X are you running? I was running Lion on my old MBP and had no issues with CS5. Now I have a new rMBP running CS6 problem free as well.


     


    I'm sorry to hear you are not finding work. If you lived near LA or NYC you would definitely have steady work with skills in those three apps.

  • Reply 14 of 34

    Quote:

    Originally Posted by mstone View Post


    That's a good point which I had not considered although I could see Adobe just eliminating the subscription without killing the software on your computer. That would be the right thing to do. Fortunately we only use the hardcore applications that have been around for years and are not likely going away anytime soon.



     


    Remember, even big companies wither and close up, or get sold, or otherwise EOL useful software, and the IT can be sold to a patent troll or IP holding company who merely wants to milk it and not support it. Remember the days when WordPerfect was *the business standard*?  It's not even a hypothetical for me. Consider the draw/paint application CANVAS for Mac, of the long-gone Deneba Systems.  Now owned by ACD Systems, they've killed off the Mac version completely, after a couple of "updates" that gave buggy utility to OS X through SnowLeopard.  This is why I keep an older Mac around, running System 9 and Jaguar--it can run the older version of Canvas flawlessly.  Thankfully the old Mac hardware is still working, after all these years.  Some day it will fail, then I'll have to abandon Canvas totally, I guess.  So sad that ACD Systems won't sell this IP to someone who has the talent to bring it into the 21st Century.  A sad ending to a star, born on the Mac a long time ago.

  • Reply 15 of 34
    gatorguygatorguy Posts: 20,282member
    mstone wrote: »
    You can subscribe on a month to month basis for any of the apps you mentioned for $29 each.

    That price is slated to change by quite a bit next year. $50/mo after the first 12/mo
  • Reply 16 of 34

    Quote:

    Originally Posted by mstone View Post


    I'm not sure why you are having trouble running CS6 on 2008 MBP. I was running CS5 on my MBP 2007 just fine. You can subscribe on a month to month basis for any of the apps you mentioned for $29 each. That means if you don't have a paying job one month you don't have to pay for the subscription, although you can't use the app either.


     


    What OS X are you running? I was running Lion on my old MBP and had no issues with CS5. Now I have a new rMBP running CS6 problem free as well.


     


    I'm sorry to hear you are not finding work. If you lived near LA or NYC you would definitely have steady work with skills in those three apps.



    I'm not sure why either, except AfterEffects was just crashing constantly. A call to tech support and investment of about an hour and a half waiting and the technician says that the app requires a minimum of 16gb of memory.  I had only 4gb in that computer and that was the Mac-supported limit.  


     


    I'm actually working quite hard on my own art.  Hopefully when it's finished and released I'll see a lot more money coming in.  I'd been working doing corporate stuff for too long (I do live relatively close to NYC) and decided to follow Steve Jobs advice and cut away the stuff that made me miserable.  The subscription service just doesn't fit into my lifestyle anymore.

  • Reply 17 of 34
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by vincentagniello View Post



    I'm not sure why either, except AfterEffects was just crashing constantly. A call to tech support and investment of about an hour and a half waiting and the technician says that the app requires a minimum of 16gb of memory.  I had only 4gb in that computer and that was the Mac-supported limit.  


     


    I'm actually working quite hard on my own art.  Hopefully when it's finished and released I'll see a lot more money coming in.  I'd been working doing corporate stuff for too long (I do live relatively close to NYC) and decided to follow Steve Jobs advice and cut away the stuff that made me miserable.  The subscription service just doesn't fit into my lifestyle anymore.



    Officially AE requires 4GB (8GB recommended). I never used AE on my MBP, primarily only inDesign, Photoshop and Illustrator which all worked fine. Whenever I had an AE or video project I was always on my Mac Pro.


     


    Yeah, those corporate jobs can be annoying especially when you have to work with marketing people who do not have any experience in the graphic design/production process. Good luck on your art projects.

  • Reply 18 of 34
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by TeaEarleGreyHot View Post




    Thankfully the old Mac hardware is still working, after all these years.  Some day it will fail, then I'll have to abandon Canvas totally, I guess.  So sad that ACD Systems won't sell this IP to someone who has the talent to bring it into the 21st Century.  A sad ending to a star, born on the Mac a long time ago.



    Too bad about Canvas. I never used it. Perhaps Corel Painter would be a reasonable replacement. It gets decent reviews as a better paint and drawing app verses Photoshop which more focused on photo composites where as Painter is more about artistic brushes and paint/paper effects.

  • Reply 19 of 34
    You think $50 a month is cheaper? It's very good for corporate clients, but not at all good for artists or freelancers who may not have consistent money flow. Actually this whole cloud thing, and the exorbitant pricing on upgrades, really has me very grumpy about Adobe. It's like they've joined Avid in the realm of gougers.

    Who is using the whole Adobe CS6 suite of professional products... but can't somehow make $50 a month?

    If you're just fooling around on your computer... maybe CS6 isn't the right product for you. Adobe Elements might be more your speed. But if you're doing any kind of serious work... you should be able to afford that.

    I'm exactly the type of person you describe... a freelancer with a sometimes inconsistent money flow. BUT... I still make way more than enough to cover my Adobe subscription.

    I do graphics and web design... and video and DVD production. Photoshop, Premiere Pro, Encore and Dreamweaver are my most-used programs. I was raised on Adobe products... there is no alternative for me.

    I could spend thousands of dollars on one version of a software package... plus another $500 every couple years for upgrades. But I'd rather give Adobe $50 a month... and save money for new cameras and equipment. :D

    The argument against software subscriptions is that you'll be paying for the rest of your life. But if I'm gonna be using their products anyway... why not go monthly?

    EDIT... I see you're an artist... so I understand your dilemma about making money.

    But the Adobe subscription is still a wonderful thing for those who can take advantage of it. Best of luck! :)
  • Reply 20 of 34
    nagrommenagromme Posts: 2,834member


    Thanks to this new program, I'm paying MORE THAN EVER for Photoshop (and Flash etc.)... and in moving from CS3 to CS6 I have gained exactly ONE new feature that is occasionally useful to me (masks on layer groups). I may well discover more. Meanwhile, some of my "favorite" CS3 bugs are still NOT fixed, and NEW bugs--including some showstoppers with the Text tool--have been introduced! These new bugs have been reported by multiple people a year ago (I checked) but are still unfixed. Meanwhile Adobe loads up my system with all kinds of anti-piracy services and non-optional updater processes.


     


    And yet we keep buying from Adobe because we work with other people who use their products, and 100% compatibility is needed.


     


    It's a monopoly of the worst kind: they keep charging more and more, while delivering WORSE and WORSE products, full of bugs and inconsistent interface quirks. Adobe used to be great. Now they just need to go under. Make way for something better.


     


    Yes, I can afford the subscription, and I do. But it's more than I used to pay buying every-other or every-third version. And considering that Adobe adds so little and breaks so much, who the heck would want to have every single version anyway?


     


    And if I ever shut down my business, I'll no longer even be able to view my old files without paying thousands?


     


    With that kind of gouging, Adobe better deliver excellence. They don't. Even the basic rectangular marquee tool doesn't work anymore! After you let up on the mouse button, the selection size changes unless you are zoomed in! This is basic stuff.

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