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Adobe's Creative Cloud Transition Case Study

Adobe launched Creative Cloud (CC) in 2012, shifting from a perpetual licensing model to a subscription model to smooth out revenues. This was a strategic change to compete with other software companies using recurring subscription models. However, customers complained about the abrupt transition and higher costs of the new model. While the board saw CC as innovative, the market was not yet ready for such a drastic change. To address complaints, Adobe should have given customers more time to adjust, communicated the reasons for the change better, and ensured prices remained reasonable.

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KAJAL MEENA
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1K views1 page

Adobe's Creative Cloud Transition Case Study

Adobe launched Creative Cloud (CC) in 2012, shifting from a perpetual licensing model to a subscription model to smooth out revenues. This was a strategic change to compete with other software companies using recurring subscription models. However, customers complained about the abrupt transition and higher costs of the new model. While the board saw CC as innovative, the market was not yet ready for such a drastic change. To address complaints, Adobe should have given customers more time to adjust, communicated the reasons for the change better, and ensured prices remained reasonable.

Uploaded by

KAJAL MEENA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
  • Why did Adobe launch Creative Cloud (CC)?
  • Case in Brief
  • How should Adobe address customer complaints?

Reinventing Adobe

Case in Brief:
Adobe wanted to widen its horizons since 2008, when it was struggling to grow. They
concentrated on three points: seizing market opportunities, focusing on "mission-critical"
technologies, and recruiting current customers.
Adobe changed their perpetual license model to a Creative Cloud subscription model.
CC would get new features and changes, whereas CS would be a single product for a short time.
They offered an introductory pricing strategy for individuals switching from CS to CC because
they were targeting existing consumers. Later, they declared that the firm will primarily focus on
CC, and that the CS product line would be phased out entirely.
The company's revenue increased, but they received a lot of negative feedback from some of
their customers.
The change was believed to be unique and futuristic by Adobe's board of directors, but it was
issued at the incorrect time, when the marker was not yet ready. The majority of them were
afraid that the changes were too drastic, and that their customers would struggle to adapt to the
new paradigm.
Why did Adobe launched Creative Cloud (CC)?
In 2012, Adobe transformed its core creative software business, now in the Digital Media
business unit, by launching Creative Cloud (CC), where customers paid a monthly subscription
fee. They launched it as a strategic plan lead to Omniture acquisition. During a strategic review
they noticed that the company’s operating team that the stock prices of software companies with
large recurring revenue streams were faring much better than Adobe’s during the recession.
Unlike its industry peers, Adobe used a perpetual license model for its creative software
business, which allowed customers to purchase and use Adobe’s creative products for an
indefinite period of time. Consequently, Adobe’s revenues were cyclical, driven by major
product or suite launches (or upgrades), which typically occurred every 12 to 24 months.
Whereas most enterprise software companies used a subscription model that smoothed out
revenues as customers paid a periodic fee to use their products. There was also the issue of
piracy They lose $1 billion a year to piracy. But if Photoshop was on the cloud, nobody could
pirate it.

How should Adobe address customer complaints?


Before withdrawing support for their earlier products, Adobe could have given its consumers
some time to acclimate to their new product and model. Customers were not ready with such a
huge shift. Also Prices should not be excessively exorbitant. Adobe should personally take
initiative to answer queries of customers and gain their trust and provide assurance. Justification
behind their change should be clearly communicated.

Reinventing Adobe Case in Brief: Adobe wanted to widen its horizons since 2008, when it was struggling to grow.

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