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The company continues to rack up double-digit earnings growth as it rides a very successful introduction this year of its media-authoring package, Creative Suite 3. Looking forward, the picture looks good as well, financially and strategically.
During his seven years as CEO (and 14 years with the company), Chizen has overseen dramatic changes at Adobe, most significantly its merger with Macromedia in 2005. Rather than cater just to designers with products like Illustrator, Adobe now has a wide product portfolio of customers that includes creative professionals, as well as consumers and businesses.
After announcing his planned resignation from the "all-consuming" job of CEO, Chizen spoke to CNET News.com about Adobe's strategy, its prospects, and the Internet industry at large.
Q: You said that you chose to leave now to show that it had nothing to do with the company's financial health. On the other hand, Adobe definitely has heightened competition from Microsoft and potentially Google. What was behind the timing?
Chizen: I've had competition from Microsoft for as long as I had the job, and Google is just one more player. So, you know, there's always competition.
This was all about me. And what I was looking for--knowing that I didn't want to do this forever--I was looking for an opportunity in which I could take a break, and when I felt that the company was in good shape.
This company has given a lot to me, has fulfilled a lot of my wildest dreams, or exceeded my wildest dreams, and I wanted to make sure I left the company in good shape.
I think about what we've accomplished, or are about to accomplish, this year with 22 percent growth, year over year, and I think about how the company is positioned going forward, I feel really good about my decision. And that's the extent of it.
One of the things you said during the conference call is that you changed to a platform company--one of the changes between seven years ago and now. And you're a much more diversified company as well. How has being a platform company put you in a stronger position?
Chizen: When you have a platform that ecosystems depend on, it gives the company many vehicles to come up with solutions that take advantage of the platform. The reality is that Adobe has been a platform company from day 1. It just never thought of itself as a platform company.
You think about PostScript and the company's ability to then come out with applications like Illustrator...and the other solutions that took advantage of PostScript. And think about what we did with the Acrobat and the Adobe Reader.
(We came) out with LiveCycle as an enterprise-class product around that platform. And what Macromedia did around Flash authoring and the Flash Media Server.
So (I tried to) encourage and force the company to think about the value of those platforms and what it means, in terms of developing new applications that we would have insight on.
One of the things that was clear at the Max (Adobe customer) conference was that Adobe wants to make money on services. But that's not really your heritage. So how do you take advantage of online software without disrupting your revenue stream and business model?
Chizen: Business models change all the time. If you think about it, Adobe was once a company that sold PostScript to a handful of printer manufacturers, and then we had to figure out how to sell shrink-wrapped software through the channel to millions of end users. And then we needed to figure out how to sell enterprise-class solutions with LiveCycle to serious enterprise IT organizations.
So services is just yet another enhancement, or shift, that Adobe has to go through. I have confidence that Adobe, the company, will be able to do that. Fortunately for Adobe, we are a technology company first. And I believe that in the high-tech industry, if you get the technology right, everything else, you can figure out.
Even in the area of services, we already participate in services--from our revenues perspective, to a small degree, but we are participating. Create PDF Online has been a service that's been available on a subscription for a number of years.
If you think about what we've done with Premiere Express, providing a (video editing) service to partners like Viacom, YouTube, and PhotoBucket--and what we're doing with Photoshop Express in the future--that will be a service offering.
So what you'll see us do is take our technology and look at different ways of delivering that and monetizing that. The good thing for Adobe is that because a lot of today's revenue sources are from products that require the power of a desktop, we will be able to experiment, and we have time to experiment to figure out what new business models work for us because our core revenue stream is still dependent on desktop-computing power.
And you see enough life in the desktop software area? Creative Suite 3 sales seem to make it look like there is.
Chizen: Yeah, the fact that we will grow approximately 22 percent this year--year over year--I think is a pretty good indication that if you're going to manipulate large images or lay out Web sites, or do animations--doing that, if you care about the quality of the output, if you're a professional--you really want the power of the desktop. I suspect that you at CNET are not using host solutions for the heavy-duty stuff.
On this question of the competition from the low end, there's a lot of great Webware and free products out there for things like photo editing. How do you stay ahead of that?
Chizen: What we'll do is continue to focus on those customers who end up with Adobe because it's the best solution. Whether it's a host solution or whether it's a desktop solution is irrelevant. I think people will be impressed with Photoshop Express.
People have certainly been impressed with Premiere Express, and that will differentiate us from competition. Today, even though you have free photo-editing software with Picasa, Photoshop Elements continues to be No. 1 in its category.
Microsoft is clearly going after more and more parts of Adobe. Do you think it is playing fair?
Chizen: It's not for me to decide. It's really up to the regulatory agencies to decide whether it is playing fair. My assumption is--and I think the European Commission helped with validating this assumption--that if it does something wrong, it will be regulated somewhere in the world to make sure that it stops doing it. And the decision that the Court of First Instance made, in terms of what it was doing with Windows Media player and Windows XP, is a great example of that.
Consolidation in the software industry is as ongoing process. Adobe's a big company (it projected on Monday that its revenue this year will be $3.1 billion). But is it big enough to stand alone three or five years from now?
Chizen: As long as we deliver innovative solutions that address current and future needs, I believe so. A lot of the consolidation is going on in more mature markets, and I would argue that what's going on with the communication of information, everything around Web 2.0, is in its infancy.
If I think about what's going to happen with the delivery of information, the type of media that's used to consume that information--the whole world is going to change over the next three or five or six years, and Adobe is an a unique position to take advantage of that, unlike other categories that have lots of suppliers, and the market is not changing that fast.
I don't know how many CRM solutions you need or how many business-analytical solutions you need--those are not new opportunities. But how people engage with ideas, and the information tools that are required--that's changing as we speak.
When I've heard you talk about open source, you've made it clear that you can't go too far in giving away too much. But you do participate in open source. So do you think you'll continue to have a hybrid approach?
Chizen: Open source is great and makes sense for some of the things that we're doing for developers and makes sense for us to partner with people like Mozilla Foundation, with what we are trying to do in the runtime.
But clearly, where we are bringing out new innovations, where we're taking out our research and development resources to create entirely new solutions--those, I believe, will continue to be proprietary. Because we have to figure out how to monetize them so we can continue to invest in the future.
If the whole world were open source, companies like Microsoft and Adobe would not exist. And I think it would make it that much harder for the open-source community because the open-source community takes a lot of the practices and some of the ideas from commercial companies and enhances them. If we didn't exist, there would be less to enhance.
Back to this discussion about platforms. Is AIR (Adobe Integrated Runtime) the next big platform for Adobe? Where do you see that going--even beyond desktops?
Chizen: AIR is absolutely the next big platform for Adobe. And what AIR does is take a lot of capabilities of things like the Adobe Reader and the Flash Player, and provides developers opportunity to create rich Internet applications that could be deployed over time anywhere.
And anywhere includes not only the PC but also mobile handsets, cable boxes, and other non-PC environments. The good news for developers is that they don't have to change their practices. They can take all their knowledge around not Java, Ajax, what they know about Flash and the Flex framework, and they can use that to create great applications.
That is our future, and we think we have a unique advantage because we're not forcing the people who develop this stuff to learn a lot of new things. It's evolutionary for them, even though for the end user, it'll end up being revolutionary.
Any plans after the end of fiscal 2008 (when Chizen's job as strategic adviser to Adobe ends)?
Chizen: (laughs) After the end of 2008? I have to get through 2007 first! So, no. No plans.
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