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Adobe's Move to the Cloud a Success

December 28, 2013
by Staff Writer

Computer software company Adobe's migration of its software suite to the cloud has proven a complete success.

The San Jose, California-based company shocked the industry by moving its software to the cloud last year. The software, which is popular with photographers, graphic artists and videographers, and includes Adobe Photoshop alongside Adobe Illustrator, Adobe Dreamweaver, Adobe Aftereffects, Adobe Premiere Pro and Adobe Fireworks, had traditionally been sold in a CD/DVD format and sold through retail outlets (or outlets like Amazon). It now comes under the "Creative Cloud" and there were 1.4 million Creative Cloud subscriptions by the fourth quarter 2013 - a 50% increase on the same time last year.

An addition of 402,000 subscribers in the fourth quarter grew the company's revenue to $768 million. In addition, usage of the company's "Adobe Marketing Cloud" also increased 38% in the period, bringing 2013 revenue for this solution to $316.2 million.

The success of Adobe's move is cited as providing a model for the growth in popularity of Software-as-a-Service (SaaS) which led to many companies abandoning the traditional 'boxed' approach to selling software. The company's ability to stabilize its revenues through annual subscriptions as opposed to retail sales has also had benefits as far as its position in the stock market are concerned.

For the first quarter of fiscal 2014 Adobe expects revenues of $950 million to $1 billion.

“Adobe has redefined the Creative and Digital Marketing categories with its industry-leading Cloud offerings,” explained Adobe's President and Chief Executive Officer, Shantanu Narayen. “Creative Cloud and Adobe Marketing Cloud are the clear market leaders and are poised for accelerated growth. We are leading the software industry in transitioning our business to the Cloud, which is enabling us to target higher top-line growth and greater recurring revenue,” said Mark Garrett, executive vice president and chief financial officer, Adobe. “We are raising our long-term revenue growth targets, with a compound annual revenue growth rate of 20 percent between fiscal year 2014 and fiscal year 2016.”

Do you know of any other companies that have disrupted traditional sales models? Let is know the details. Add your comments below.

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