Adobe Creative Suite Goes Cloud as Microsoft Hedges Bets with Office

By Jim Lundy

Adobe made headlines the other day when they announced that all future enhancements to their Creative Suite will only be made on its Creative Cloud version only. Note, they are still selling Creative Suite 6 as a traditional shrink-wrapped bundle, which is what Adobe has always been known for. However, with their move, they basically end-of-lifed their shrink wrapped software business. This blog post is about the shift to Cloud and the subtle differences in Go-To-Market strategies that can have a tremendous impact on short and long term revenues.

To us, it seems odd that Adobe is placing such a big bet on Cloud just now. Its Creative Cloud offering has only been on the market since Q4 2011, while Microsoft is basically on its third iteration of Office 365. Which approach is right?

Microsoft is hedging their bets with Office. The big push is for Office 365 Home Premium with a subscription price of $99 per year. That said, Microsoft is happy to sell users a boxed set of software.  They are also ensuring that Office can be sold where consumers buy things, such as Office Superstores and online stores, such as Amazon and NewEgg.

There is no doubt Microsoft is making a huge push on Office 365 and it is touting the benefits to both enterprises and consumers. I’ve been on the road talking with IT and Business Professionals for the last three weeks and we have seen a significant surge in enterprises adopting Office 365. Despite all the protestations from Microsoft Sales Execs, Microsoft will negotiate on price.

Back to the packaging and Cloud. The big difference between Adobe and Microsoft is that Microsoft didn’t totally pull the plug on shrink wrapped software for Office. What we have noticed is that when selling a new version of office, what they are doing increasingly is making buyers download the copy of Office that is purchased. This move saves Microsoft tons on manufacturing and distribution of DVDs.

Adobe is still selling Creative Suite 6 through retailers, but on their website they only sell Creative Cloud subscriptions. Also, there will be no Creative Suite 7 because it is now all about Creative Cloud. Like Microsoft’s push for Office 365, Adobe is pushing the benefits of Creative Cloud pretty hard and we will note that they have dropped the price of Creative Cloud since it was launched in 2011.

Microsoft also is an active seeker of customer feedback from its retail channel and it acts surprisingly fast when it gets a negative reaction. It recently rolled back the non-transfer rights for buyers of Retail versions of Office 2013. That policy was put in place to push Office 365 subscriptions. When customers cried fowl, Microsoft changed the policy.

Below is a table that summarizes our findings:

Item	Adobe	Microsoft
Software Evaluated	Creative Suite 6 vs Creative Cloud	Office 2013 vs Office 365
Sells Shrink Wrapped version of Product	Creative Suite is sold via third parties only.	Office 2013 is sold by Microsoft and third parties.
Offers Shrink Wrapped version on its Website	No	Yes
Will offer future versions of Shrink Wrapped Software	No	Yes

 

The Adobe announcement this week is still fresh and time will tell if they shift their stance. Our take is that Adobe may have been pre-mature in pulling the plug on Creative Suite packaged versions. It opens the door for other competitors to offer more flexibility on their offerings and we will note that purchases of apps from stores such as the Apple OS X store continue to rise. Enterprises that sell packaged software can learn from this. Microsoft is the master at this and from our vantage point, if they haven’t pulled the plug on retail editions of their software, others would be wise to follow suit.