Adobe's Creative Cloud: A route to bring laggards up to speed

Adobe sits in the intersection of the two software business models and the Creative Cloud will swing it closer to a subscription revenue stream.
Written by Larry Dignan, Contributor

Adobe's Creative Cloud launched along with its Creative Suite 6 product lineup and the move marks a transition to the cloud and a big experiment on whether a traditional shrink-wrap powerhouse can move to a subscription model.

The financial success of Creative Cloud will depend on two primary factors---bringing laggards (those people using Creative Suite 3 and 4 up to date and Adobe's ability to expand its customer base. Another potential side benefit from the Creative Cloud would be reducing piracy, which costs Adobe a bundle.

More: CNET: Adobe makes the CS6 sales pitchFive reasons Adobe's CS6 subscription is smart

Source: Adobe via CNET

As noted previously, Adobe's transition to the Creative Cloud may cause some pain before any gain. Moving from licensing to subscription can be painful at first. In the long run, the transition can work. Today, Adobe sits in the intersection of the two software business models.

Related: Adobe's biggest Creative Cloud perk could be lower piracyAdobe’s shift to cloud is going to hurt at first

For instance, Adobe launched 14 Creative Suite 6 point products and various suites. The pricing breaks down like this.

  • Adobe Creative Suite 6 Design & Web Premium goes for$1,899;
  • Adobe Creative Suite 6 Design Standard will cost you $1,299;
  • Adobe Creative Suite 6 Production Premium will cost $1,899;
  • and Adobe Creative Suite 6 Master Collection is $2,599.

There's upgrade pricing for those on older editions.

The Creative cloud will cost $49.99 a month based on an annual membership and $74.99 for a month-to-month deal. Adobe will offer a $29.99 limited time deal for CS3, CS4, CS5 and CS5.5 users.

If Adobe can convert those CS3 and CS4 users it will generate returns on its cloud offering. Why? CS3 and CS4 folks probably wouldn't move to CS6 anyway. In addition, Adobe will keep those customers in the fold.

The Creative Cloud isn't all gravy. Adobe would obviously get more of a revenue pop if it just sold these customers a pricey CS6 version. A $49.99 subscription to Creative Cloud would take 51 months to garner the revenue from the Adobe Creative Suite 6 Master Collection. On the other side, of the equation Adobe keeps the customer and can upsell new services. "Creative Cloud pricing was as expected and should increase the value per customer over time," said Morgan Stanley analyst Adam Holt.

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