Adobe’s subscription model and the future of software

Adobe’s subscription model and the future of software

By Hayley Tsukayama, Wednesday, May 8, 12:45 AM

Those waiting to grab the next Adobe Creative Suite may be disappointed — there won’t be anything for you to pick up.

Adobe announced Monday that it will no longer sell boxed versions of its software, or even the option to buy individual programs from the popular suite. And Adobe is dropping the well-known Creative Suite (most often abbreviated to CS), shifting all the programs under the “Creative Cloud” brand that it uses for Web apps, to reflect that it’s not interesting in leaving the cloud any time soon. From now on, the company said, anyone who wants to buy Photoshop, Dreamweaver, Illustrator or other parts of its Creative Suite software can subscribe to them monthly as part of a software package. The update will be available starting next month for an annual membership that breaks down to $49.99 per month for the full suite. Those who own products from CS3 through CS5.5 will get a discount on the first year of the new cloud service, for $29.99 per month. Individual app subscriptions also are available for $19.99 per month.

Plenty of software companies only distribute their software through downloads. Microsoft and Apple offer their operating systems through digital downloads. And when was the last time you took a good look at the PC gaming section of your local store? Digital downloads and hubs such as Steam or Origin have made those sections shrink — in some stores — to nothing.In some of those cases, companies will also offer the option, if you really want it, for users to get a physical disc along with their download, but it’s becoming much less common.

What makes Adobe’s announcement so interesting, however, is the subscription-only approach. Even Microsoft, which is pushing its own subscriptions to Office Suite, still allows users to buy single versions of certain programs outright.

Now, Adobe is essentially letting you rent their programs — they become another service provider in your life like your cable company, utility provider or wireless carrier.

For consumers, it’s a tricky tradeoff. A subscription to Creative Cloud puts you out about $600 per year. That’s cheaper, for example, than the company’s CS6 Design Standard suite, which launched for $1,299 last year, and doesn’t have all of the programs that you get from a cloud subscription. Users could have used those programs for several years without upgrading or paying Adobe again. Sure, they may not have had the most updated technology, but they also wouldn’t be paying for programs they may not really need or want.

Subscriptions, and certainly digital downloads, appear to be where the software market is headed. And they do provide some consumer benefits, such as instant access to new features. But a move to a subscription model should also make consumers consider what they need to use and how much it really costs them in the end.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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