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Adobe and the cloud!
  
 
ebiggs
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p.1 #1 · Adobe and the cloud!


I see Adobe stock is up from around $38 bucks at the first of the year to about $48 now.
I suspect this means the 4.4 billion dollar company will not be changing it's move to the cloud.
Anytime soon that is. Bottom line, it's all about the money!



Jul 12, 2013 at 04:40 PM
WAYCOOL
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p.1 #2 · Adobe and the cloud!


Yes it seems Wall Street dose not see the cloud as a problem. Will have to wait out the long run and see if the fleeing photographers hurt the bottom line. If in a year or two we all crawl back to the cloud the they have won.


Jul 12, 2013 at 05:01 PM
Karl Witt
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p.1 #3 · Adobe and the cloud!


All Clouds are temporary The Cloud is not a bad idea its just bad business conduct of the pricing of the Cloud on Adobe's part IMO.
For me even at a Teacher pricing I would have to dish out $600 in two years to use it? And if I can't get to the Cloud for some reason it will be difficult to get help to get there as my last chat with them was embarrassing on their part.




Jul 12, 2013 at 06:00 PM
redcrown
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p.1 #4 · Adobe and the cloud!


Take a closer look at the Adobe stock price and compare it to the Dow. Consider how much of its movement is due to the general economy and how much is due to actual company performance (and the Cloud move). It rose from 38 on Jan 1 to 47 on May 1 by riding the coat tails of the economy. Following the May 1 Cloud announcement it immediately dropped to about 43 and stayed there (while the Dow continued to rise). The recent jump to 48 is again due to the surge in the DOW. Everybody is up.

But you are correct that Adobe won't change the Cloud strategy anytime soon. It's a long term gamble. So to make a personal choice about subscribing or switching, you have to assume the Cloud will last at least 3 to 5 years.



Jul 12, 2013 at 06:19 PM
Dave_EP
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p.1 #5 · Adobe and the cloud!


redcrown wrote:
So to make a personal choice about subscribing or switching, you have to assume the Cloud will last at least 3 to 5 years.


To add to this, almost everything I do today could be done with Adobe software that was around 3-5 years ago plus some free bits and bobs like DNG converters.

New tools are nice, they do make somethings easier, but if you don't have them it's not the end of the world.

I don't rent my tools. End of story.



Jul 12, 2013 at 10:50 PM
butchM
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p.1 #6 · Adobe and the cloud!


From the time CS6 was introduced in 2012 until the MAX CC announcement in 2013 (approx. one year) Adobe sold 4.1 million installs of Suites and 4.3 million installs of individual apps. For 2012 Adobe showed revenues in the neighborhood of $4.4 billion.

Over that same time period they sold only 500,000 subscriptions of CC ... they offered no breakdown as to how many were full collection subscriptions or individual app subscriptions.

While they are eager to indicate that they now have over 700,000 subscribers (which in their own projections, they anticipate only 1.25 million subscribers by the end of 2013) ... and don't expect to surpass 3 million subscribers until late in 2015.

Factoring 3 million subscribers ... going for the full package at $50 per month ... is only $1.8 billion per year if ALL the subscribers go for the full package ... Where are they going to pick up the $2+ billion they are accustomed to earning?

Sure, Lightroom and Photoshop Elements are still perpetual licenses ... but it would take 6.7 million new Lightroom users at $150 bucks a pop to reach $1 billion in sales ... or twice as many Lr upgrades to reach $1 billion in sales ....

The current, or recent short term stock fluctuations seem to be of little concern ... at least to me ... it is what happens 2-5 years in the future ... from what I am seeing ... there doesn't seem to be a stampede to get in on the CC merry-go-round. It appears that CC subscribers are and will be in the minority of Adobe users for some time to come.

I don't think anyone can safely or accurately predict Adobe's future based upon a few months of stock valuation ...




Jul 13, 2013 at 03:11 AM
EB-1
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p.1 #7 · Adobe and the cloud!


It always depends on the prick. If sales are low they will reduce it.

EBH



Jul 13, 2013 at 04:14 AM
Tom K.
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p.1 #8 · Adobe and the cloud!


butchM wrote:
I don't think anyone can safely or accurately predict Adobe's future based upon a few months of stock valuation ...



I agree with that.



Jul 13, 2013 at 05:29 AM
verbiage
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p.1 #9 · Adobe and the cloud!


EB-1 wrote:
It always depends on the prick. If sales are low they will reduce it.

EBH


Hear! Hear! (sorry, couldn't resist) The perfect Freudian slip.



Jul 13, 2013 at 08:59 AM
EB-1
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p.1 #10 · Adobe and the cloud!


PRICE. Too late to change it.

EBH



Jul 13, 2013 at 03:40 PM
 

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Ben Horne
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p.1 #11 · Adobe and the cloud!


Also, if you do the math based on the online petition (https://www.change.org/petitions/adobe-systems-incorporated-eliminate-the-mandatory-creative-cloud-subscription-model) 36,457 people said they will not be subscribing to the cloud. Many of these people would have spent money for a CS7 upgrade. At $20 per month, that amounts to $8,749,680 that adobe will not receive each years. At $50 per month, that amounts to $21,874,200 per year that they are missing out on.


Jul 13, 2013 at 03:50 PM
ebiggs
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p.1 #12 · Adobe and the cloud!


butchM wrote:
I don't think anyone can safely or accurately predict Adobe's future based upon a few months of stock valuation ...


And singling out just one of Adobe's products or service. But it is certainly better than the stock going down.
The current market trend may be bullish but under preforming companies stocks still go down. No matter how you spin it, it isn't good news for those of us that wish Adobe would have to reconsider.



Jul 13, 2013 at 09:45 PM
chez
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p.1 #13 · Adobe and the cloud!


ebiggs wrote:
And singling out just one of Adobe's products or service. But it is certainly better than the stock going down.
The current market trend may be bullish but under preforming companies stocks still go down. No matter how you spin it, it isn't good news for those of us that wish Adobe would have to reconsider.


Yeh I read in one of their investment reports that they were surprised by the number of cloud subscribers that signed up in this past year.



Jul 13, 2013 at 11:46 PM
Luta13
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p.1 #14 · Adobe and the cloud!


Adobe reported higher than expect earnings in June. The stock price is moving because Adobe is beating analyst's expected earnings. Overall, it was an impressive 2nd quarter for the company. Creative Cloud subscriptions total over 700,000 and growing. They are adding nearly a quarter million subscribers a quarter for Creative Cloud. Subscription adds have impressed Wall Street analysts and Adobe was, and still is, pretty aggressive with what they believe those subscription adds can be.
Performance and fundamentals are driving the stock price and a stable stock market is assisting the upward movement.



Jul 14, 2013 at 06:09 PM
butchM
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p.1 #15 · Adobe and the cloud!


Luta13 wrote:
Adobe reported higher than expect earnings in June. The stock price is moving because Adobe is beating analyst's expected earnings. Overall, it was an impressive 2nd quarter for the company. Creative Cloud subscriptions total over 700,000 and growing. They are adding nearly a quarter million subscribers a quarter for Creative Cloud. Subscription adds have impressed Wall Street analysts and Adobe was, and still is, pretty aggressive with what they believe those subscription adds can be.
Performance and fundamentals are driving the stock price and a stable stock market is assisting the upward movement.


Really? If ALL the new 200,000 CC subscribers added in the second quarter went for the $50 that is only about $30M in revenue for the quarter ... very insignificant when you consider Adobe posted over $1B in revenue for that period ... where did that money come from? It wasn't a surge in CC subscriptions. Did they sell over 12 million upgrades of Lr 5? to make up the difference?

Adobe's own projections was for 1.25 million CC subscribers by year's end ... they had 500,000 when they made that projection with one quarter of the year already in the can ... that IS 250,000 per quarter ... that's not exceeding their projection ... but maintaining their projection ...

If you consider that 1.25 million subscribers (if that ALL go for the big package) is only $750M annually ... yet in 2012 they sold point product CS6 licensing that accumulated $850M .... are they really going to still sell enough CS6 licenses to cover the difference? Or ... actually sell enough extra CC licenses to match their revenue of $4.4 billion in 2012?



Jul 14, 2013 at 11:52 PM
Luta13
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p.1 #16 · Adobe and the cloud!


Yes, really. Adobe is one of the largest and most diversified software companies in the world. Earnings don't revolve solely around PS6 or LR5 subscriptions. Keep in mind also that the revenues will be down initially as they transfer to the subscription based model because users are now paying a small (albeit perpetual) licensing fee versus paying for the entire product up-front. Adobe's 'Digital Media' division (the division responsible for Creative Cloud) actually did have a decrease in revenue. As mentioned, this was expected as users transfer to subscription based models. They expect subscription revenue (total subscription revenue, not just Creative Cloud) to increase in 2013 to 25% of total revenue from 14% in 2012.
Also, your numbers are off. Adobe reported $138 million in subscription revenue for the second quarter '13 from their 'Digital Media' division (again, the division responsible for Creative Cloud).



Jul 15, 2013 at 12:33 AM
butchM
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p.1 #17 · Adobe and the cloud!


It's really very simple ... CS6 sold 8.4M licenses in the first year of availability. If Adobe can reach their goal ... they will have 1.5M CC subscribers in the first 12 months since the Max announcement ... that's only 18% of the CS6 user base ... less than one in five making the transition. I don't care how large or diverse your business is ... that's a huge pile of cash to leave lying on the table.

Likewise, 2013 compared to 2012 ... even if the Digital Media division shows an increase ... software sales, in the absence of a CS7 licensing option, will show a substantial decrease ... so it is logical that the DM division will be an increase in overall percentage of the whole ... that in of itself does not equate to stabilizing revenues.



Jul 15, 2013 at 06:16 PM
Luta13
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p.1 #18 · Adobe and the cloud!


butchM wrote:
Likewise, 2013 compared to 2012 ... even if the Digital Media division shows an increase ... software sales, in the absence of a CS7 licensing option, will show a substantial decrease ... so it is logical that the DM division will be an increase in overall percentage of the whole ... that in of itself does not equate to stabilizing revenues.


I respect your opinion Butch, but just dont agree. Every industry wants a subscription based model nowadays. Why? Because it leads to more predictable revenue streams and doesnt make you so dependent upon the sale of one item. Every industry from manufacturing to aviation to music to financial services has their own form of pay-as-you-go subscription model and every business is looking to do this.
Products today have a higher service component than products from past decades. This is often referred to as the Servitization of Products. Virtually every product today has a service component to it.
Its everywhere. I dont blame Adobe. It is what managers at Ivy League business schools are being told works...and whether we like it or not...it usually does work.



Jul 15, 2013 at 08:06 PM
chez
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p.1 #19 · Adobe and the cloud!


butchM wrote:
It's really very simple ... CS6 sold 8.4M licenses in the first year of availability. If Adobe can reach their goal ... they will have 1.5M CC subscribers in the first 12 months since the Max announcement ... that's only 18% of the CS6 user base ... less than one in five making the transition. I don't care how large or diverse your business is ... that's a huge pile of cash to leave lying on the table.

Likewise, 2013 compared to 2012 ... even if the Digital Media division shows an increase ... software sales, in the absence of a
...Show more

Don't forget the CC subscription is a constant stream of revenue every year. The release of new versions of their products were on a more like 18 month or sometimes even more cycle, with a big influx of sales during the first part of a new release and then a drop in sales as the new release ages.

One thing that a company loves is a steady stream of revenue, day in day out....



Jul 15, 2013 at 08:34 PM
butchM
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p.1 #20 · Adobe and the cloud!


chez wrote:
Don't forget the CC subscription is a constant stream of revenue every year. The release of new versions of their products were on a more like 18 month or sometimes even more cycle, with a big influx of sales during the first part of a new release and then a drop in sales as the new release ages.

One thing that a company loves is a steady stream of revenue, day in day out....


That's not quite the case ... considering that Adobe went to the no more than one generation back upgrade policy ... users could no longer skip a cycle, if they did, they had to pay full price to upgrade ... then up until the May MAX announcement, their plan was to offer new perpetual versions of CS every 12 months, in fact more than a few users were fully expecting to buy CS7 only a year after CS6 was released ... yes, there was a tradition of 18 month cycles in the past ... but Adobe were planning otherwise before they decided to drop the perpetual model.

I agree ... software developers of any size would much more prefer a perpetual income over perpetual licensing ... the difficult part is convincing enough of their users it is also a good deal for them as well ...

Thus, when 4 out of 5 don't opt for the subscription model ... I can't see how they can match the historical revenue levels they are accustomed to.



Jul 15, 2013 at 09:01 PM
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