Adobe was founded in 1982 by John Warnock and Charles Geschke. They left Xerox to develop the PostScript language. Revenues for 2016 were close to $5.9 billion. It has a positive free cash flow and has done so for several years. The company has done well by adopting a subscription-based model for its software.
The Adobe Creek ran through the properties of both owners, and hence they used the name for the company.
How the Company Started
The founders were from Xerox PARC and wanted to develop a product capable of becoming an industry standard. They developed the PostScript language and hardware manufacturers took notice when many creative people were asking for support for their printers.
The founders were able to secure a $50,000 loan. The company went public in 1986. According to CrunchBase.com, in 2016, capital management firms bought a $175 million stake in the company.
Adobe criticized Apple for not supporting its Flash format on iPhones and other products. Apple claimed the format was not secure or robust. Adobe claims they did this for competitive reasons. However, Steve Jobs maintained the HTML5 protocol allowed developers to create videos without reliance on any third-party software.
Adobe has recently jumped on the workflow set of products. This suite of products is called Marketing Cloud. They are up against some major players in this space and it is too soon to tell if they are gaining any ground with it.
The high-end price points of the company’s products have caused others to develop products that are compatible with Adobe formats for much lower prices and many are even free. Several of these alternatives are available on the web so no installation of software is needed to use them.
Why it Works
The company set the standard by giving away PDF readers. This got web users hooked as they could save documents and distribute them. These documents were visually pleasing and were not easy to alter. This made it a great tool for businesses to distribute information about their companies.
The concept took off when marketers latched onto the PDF craze. They could sell their digital products via PDF. Only those who owned expensive software or were technologically savvy enough to code would be able to change the documents.
Therefore, marketers could fill these documents with links back to their websites or offers. They did this with little risk of others replacing those links.
Demand for diverse forms of content will continue to increase. This is a boon for the company as they have several products that can address these content forms.
The company has introduced a subscription model that is affordable to both businesses and individuals. Before this, users had to spend significant amounts of money for each license of the company’s software. This spearheaded the development of inexpensive (and even free) alternatives.
Due to the complete set of tools contained in the Creative Cloud (CC) suite of products, many users are hopping on board the Adobe CC train. Subscription models often keep users for several months and sometimes even years.
The company has status appeal, meaning creative types will only use Photoshop or Illustrator, etc. These tools have a complete set of features compared to the low-priced competitors. People who don’t consider themselves in the creative fields probably won’t need many of the features available in the company’s suite of software.
But, with the lower price points of the subscription model, they will join the ranks of the elite creatives. To say you are an expert in one or more Adobe products carries a fair amount of weight in the industry.
When Adobe acquired Macromedia in 2005, it added to its line of products. Macromedia was known for its own suite of design tools but had its popular ColdFusion developing software. This continues as part of Adobe’s line of products, since the acquisition.
The feature-rich products maintained by the company, and the length of time the company has existed as an industry leader, gives it a word-of-mouth advantage.
Businesses are reluctant to switch to lower-priced alternatives out of fear they may need the full functionality of the Adobe products.
When companies hire creative people, they often list Adobe products as part of the skill sets. For instance, if they are looking for a graphic designer, they may require this person to have a solid knowledge of Photoshop, Illustrator, and InDesign, etc. This is not by design, but as a by-product of having software that is specialized. Many companies require Dreamweaver skills for developers, which carries the concept even further.
The company offers coupons on the Creative Cloud suite of products. Sometimes, these products will include free trials of the suite. Once users download the products, they become hooked and will extend past the trial offers.
You will find many forums and boards with an almost cult-like following. These members are often divided by hardware platform as well (PC vs. Mac). The products are high-end enough that the members take pride in offering tips on how to use the products. Members who offer these tips gain notoriety on the platforms.
Non-designers or creative types will tend to knock Adobe for its high-end offerings. Adobe has answered this concern to some degree by offering a subscription service.
In a recent listing on PCMag.com, the editors rated Adobe Photoshop at 5-stars and gave it an outstanding designation. If you have worked with Photoshop before, and have gone through its steep learning curve, you would agree.
It is high-quality software that delivers everything you need for a graphics editor. The editors loved the new features included in its recent release. These include 3-D Tools and video editing, among others. Adobe offers many other high-quality products. Photoshop happens to be one of its most popular.
Lessons Learned By The Business
- The company learned to offer free training on the capabilities of its software products. This can get current users to remain loyal, as well as obtain new customers by showing how the software products can make their jobs easier.
- Adobe was an early adopter of student and education licensing. This allowed students to afford the programs while getting hooked on them at the same time. When they got out of school, they were already prepared for certain aspects of their job as it relates to design and Adobe products.
- The company learned that it shouldn’t try to develop all its products in-house. When they want strategic products as part of their asset mix, they acquire companies that will produce that for the company. They also have the advantage of their distribution channels and brand loyalty.
- Management has learned that not every potential user has the need for all of the functions offered by its products. Many average users will get by just fine with a subset of these functions. For these users, products such as Photoshop Elements will suffice.
How Other Businesses Can Learn From This
Get users to become your brand ambassadors by having your products become the industry standard. Listen to what they want in the products and make the changes to fit those needs and desires.
When these products become sophisticated enough, they will dominate the market. If your products can become listed as part of the skill sets that companies desire, you will be well set to have your products carry on for years.