The wholesale move to subscription pricing that Adobe Systems Inc. announced at its Max conference in Los Angeles this week is winning the company new business from the smaller end of the market, company executives said.
“We are seeing faster growth of new customers,” David Wadhwani, senior vice president and general manager of Adobe’s digital media business unit, said in a media briefing yesterday. “And that is what is needed to drive the growth of the company.”
It’s a good demonstration of an effective strategy companies that were once focused on larger enterprises can take if they wish to woo the small and medium-sized business (SMB) sector.
In a post I wrote a couple of weeks ago, I dealt mainly with the care that ambitious companies must take in amending their messaging to attract smaller customers without jeopardizing their existing enterprise sales. Clearly, companies can also open up opportunities at the smaller end of the market simply by making their products easier for SMB customers to buy.
This seems to be paying off for Adobe. One company executive told me that the average size of its customers, as measured by revenue, has fallen by about half since a subscription pricing structure was introduced about a year ago. Adobe has racked up about half-a-million subscribers since then, something that will now escalate as the company completely abandons one-off pricing.
I asked Wadhwani about how the company sold its strategy to investors. He said the move was taken to cater to the company’s “primary constituency (which) is customers,” by creating a “much broader canvas to solve many more problems our customers have.”
That being said, he acknowledged that the story also had to be carefully explained to investors. “In the short term, it will have a revenue impact,” he said, as monthly subscriptions fail to keep pace with the larger sums customers pay to buy new software versions outright. But subscription-based pricing is a more sustainable revenue model over the long term, he added. Certainly, investors seem to be in agreement; Adobe’s stock, which had been trading in the low 30s six months ago is now in the mid-40s.
Adobe’s conference, which winds down today, featured one of its more popular events last night when the company demonstrated several new features its developers are working on, only some will ever see the light of day in its commercial products.
Individual developers demonstrated how photos could be manipulated in post production to, for example, take more favourable lighting found in someone else’s photograph and apply it your own, days or months after taking the actual photograph. Other Photoshop-related sneaks allow the manipulation of objects in photographs, to make vertical the sides of buildings photographed from a street-level perspective, for example, or to significantly alter the perspective of an object added to a picture so that it matches the background more faithfully.
Developers in the crowed were particularly appreciative of coder-friendly techniques they could exploit to more easily take greater advantage of the Adobe’s design tools. One dramatic demonstration showed how color transformations and 3D motion could be added to liven up websites, all without having to write any code. An intriguing application of design-editing techniques to the audio world used a visual editor to paint unwanted sounds in a recording so they could be more easily removed.