Over the years, Adobe was reinventing itself to becoming a digital media company from being a provider of popular software. By around mid-2013, the company packaged Creative Cloud instead of selling its software like Photoshop and Acrobat. Under the Creative Cloud package, customers are required to pay a subscription fee per month. Weeks from its launch, many customers were complaining against this move by the company. Should Adobe forego its reinventing plan?
Sunil Gupta and Lauren Barley
Harvard Business Review (514066-PDF-ENG)
January 03, 2014
Case questions answered:
- What should Adobe do in response to consumer complaints?
- Why did Adobe launch Creative Cloud?
- What would be the revenue impact of Creative Cloud?
- Why did Adobe move into digital marketing, and what were the risks of this move?
- What new capabilities will Adobe need for Creative Cloud to be successful?
- Under their Creative Cloud strategy announced in 2011, Adobe transitioned from packaged software to a SaaS model. What were the most significant changes in the Adobe business model that needed to occur when they made this transition?
- Why is Adobe well-positioned to act as the ecosystem orchestrator?
- How would you describe Adobe’s intended sustainable competitive advantage in the market for the solution it is providing under its Experience Cloud Strategy?
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Reinventing Adobe Case Answers
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What should Adobe do in response to consumer complaints?
By 2008, Adobe was the market leader in the creative software space through its Photoshop, PDF, and Flash software, but the company saw stagnant growth in its revenue from the creative software business.
Adobe CEO Mr. Narayen decided to have a strategic shift to find another market where Adobe can have increased growth in revenue. After exploring various markets, Adobe finally decided to broaden its horizon in the digital content space and offer a one-stop solution for content creators to content marketers.
They wanted to provide service to existing Adobe software customers such as digital content creators, advertising agencies, publishers, and marketing firms, so moving into the digital marketing space seems like a logical strategic move.
In 2009, Acquiring Omniture, a leading online marketing and web analytics firm, to venture into the digital market space providing a platform to create and distribute content to track the reach.
Why did Adobe launch Creative Cloud?
Adobe launched Creative Cloud to improve customer experience and to drive revenue. On the consumer side, the goal of Creative Cloud was to provide one comprehensive solution for digital advertisers and marketers and publishers.
As digitalization grew, so did the creative content market and the value of data. Adobe’s release of Creative Cloud took advantage of the growing creative user base and provided a location to store infinite amounts of data.
On the business side, Adobe released the creative cloud business model, which combined desktop, mobile, and services creative software into one bundle on the cloud, in order to shift their business into a subscription-based revenue model.
Additionally, the shift to a monthly subscription model reduced financial risk because companies with large, recurring revenue streams performed better during recessions. Not only did
Adobe believes they could increase revenue by implementing a frequent payment model. Still, they also believed they would reach new customers due to the lower startup cost and the wide array of software available in the bundle.
The acquisition of Omniture further optimized the Creative Cloud product because a customer’s workflow would now be fully integrated end to end in Adobe products. The Creative Cloud subscription model allowed Adobe to…
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