Forget about thinking outside the box. Adobe is doing away with it altogether. The company announced it would no longer sell packaged software. It also is not going to make its creative apps, such as Photoshop, available for download to individual's desktops. No, if you want Adobe software, you'll have to go to the cloud to get it.
The move is seen as a risk for Adobe, which currently generates $4.1 billion in revenues from the sale and licensing of its packaged software to creative professionals. All new software created by the company will be available through a subscription service called Adobe Creative Cloud. With the cloud service, subscribers gain access to the company's extensive line of creative applications, online services that help production flow, and online storage capabilities.
"The reason we're doing this now," Scott Morris, senior director of marketing for Creative Cloud, told Time, "is because [Creative Cloud] adoption has been so amazing."
According to Adobe, half a million subscribers joined Creative Cloud in the year since it was first launched.
"Customers have to come to terms with the end of perpetually licensed software," IDC analyst Al Hilwa, told The Associated Press. "Adobe is ahead of the game."
Brad Zelnick, an analyst at Macquarie, believes Adobe could see subscription revenues reach $697 million by the end of the year.
"The important point is the cost of renewing that subscriber is less than the cost of acquiring the customer in the first place," Mr. Zelnick told The Wall Street Journal. "You see efficiency from the direct relationship with the customer compared to the discrete software sale in the old business model."
Subscription pricing for individuals starts at $49.99 a month for new customers. Existing Creative Suite customers, students and teachers will pay $29.99 a month.