Adobe Goes All In for Cloud, While Microsoft Stays on the Fence

My friend Jessica makes her living doing Web design and dressing up photos with special effects. Like a lot of creative professionals, she relies on Adobe’s flagship Creative Suite to get much of her work done.

As you may have heard, Adobe is going to stop selling CS, move it to the cloud, and rent it to consumers by the month. Consumers “love” the new model, says Scott Morris, senior director of product marketing for Adobe’s Creative Cloud.

Don’t say that to Jessica. When I asked her about the switch she said: “My reaction?  Jeeeeeez!  Guess I’ll never upgrade from CS 5.5.” Actually, Jessica could upgrade to CS 6, but that version will be the last one that Adobe ever sells. It will not be updated beyond addressing bugs and OS compatibility, and there will be no Creative Suite 7.

Instead, users will rent the apps they want via Adobe’s Creative Cloud service. The price depends on a number of things, including the number of apps a user wants to rent, and how recently he or she has upgraded Creative Suite. People who own CS 3 or later will pay $30 a month; many others will pay $50 a month. Given the complexity of the pricing options for the traditional licensed versions of the Creative Suite and the new subscription model, it’s not at all clear to me whether most users will come out ahead or not.

What is clear, though, is this: Adobe comes out ahead. Instead of waiting for its users to upgrade to a new version of the software every few years, the company will enjoy a much more predictable revenue stream.  

Because Adobe’s products are quite expensive, they’re a popular target for software pirates, an issue that will be less troublesome when there are no longer discs to copy.

In an open letter to its customers, Adobe said this:

Today’s tools and services are not living up to the creative community’s expectations. Assets are difficult to track across computers. Mobile devices aren’t integrated tightly enough into creative activities. There is a continuous struggle to find effective ways to collaborate. And creative processes do not fully embrace the benefits of the broader creative community. (Adobe also said the new model means it will deliver upgrades much faster.)

Meanwhile, Microsoft, which has plenty of problems as the PC market founders, would probably like to do something similar — but for now, it won’t, the software giant said in a blog post.

However, unlike Adobe, we think people’s shift from packaged software to subscription services will take time. Within a decade, we think everyone will choose to subscribe because the benefits are undeniable. In the meantime, we are committed to offering choice–premier software sold as a package and powerful services sold as a subscription.

Whether Adobe users like it or not, and whether Microsoft moves to a subscription-only model for it’s Office suite sooner instead of later ultimately won’t matter. The days of buying software are coming to and end as more and more applications and services move to the cloud.

In many ways, that will be a good thing as it offers consumers more flexibility, but they will have to be extra alert as they sort out the pros and cons of the new business models.

Update: People are angry about Adobe’s new policy. Derek Schoffstall of Harrisburg, Pennsylvania, started a Change.org petition asking Adobe to reconsider:“Adobe is robbing small business, freelancers, and the average consumer,” he wrote. “They do not seem to understand that every company is a not multi-national, multi-billion dollar corporation that has an infinite amount of resources. In the end it comes down to this: all of Adobe’s consumers will not be able to make such a large payment every month on the CC subscription model.” So far, nearly 4.000 people have signed.