Newsmaker: It's Adobe's game to lose, CEO says

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So Google has risen on your horizon (as a competitor) in the past year?
Chizen: Well, when they acquired Picasa, they pretty much tipped their hand. And then they acquired Writely, and with the Google Apps, if we are asleep, they can just keep offering applications. I think Adobe's release of the video Remix product sends a strong message that we are not asleep.

Is it true that the majority of Creative Suite users are nonprofessionals?
Chizen: It is. I characterize them as noncreative professionals, so they are not in the Web creation business, the design business, the newspaper business...etc. They are at work as a salesperson who wants to help their Powerpoint presentation, or they are at home. And even with Creative Suite, as of last year, 40 percent of the people buying it were not creative professionals. I found that fascinating, but not surprising based on the number of people who ask me for a copy of the product for free. I always ask them: what are you doing with it? Well, I really want Photoshop because I'm thinking of doing a layout or helping the kids with the yearbook, or I was thinking about doing a Web page. The analogy I always use is to think about people who buy a Mercedes or a Lexus or a BMW to drive to work 10 miles. People want the brand, they want the marquee and some of that is our customer. They are the Tiffany buyer, it's the upscale buyer and they want the best.

Even with Creative Suite, as of last year, 40 percent of the people buying it were not creative professionals. I found that fascinating, but not surprising based on the number of people who ask me for a copy of the product for free.

Are you concerned about the upward pressure from open source?
Chizen: No. I mean, it's always a concern, but the open-source community, at least in our area, hasn't been able to figure out how to ensure that same level of quality and innovation that we are able to do. If there is one killer feature in the new version of Photoshop that is not in the open-source product, people will want Photoshop. I think that's what differentiates our customer from someone doing word processing or spreadsheets. In fact, we are cooperating with the open-source community and Mozilla and we want to do more of that.

At the Web 2.0 Summit, you said, in essence, we like to share but we have to draw the line someplace, right?
Chizen: We spend 19 percent of our revenue on R&D. I have to pay for that somehow, plus I'm in business to make money. I have shareholders.

So how would you classify where Adobe is, in open source, versus other companies like IBM, which has been really aggressive in the open-source world?
Chizen: Well, part of it is that the bulk of their business is infrastructure, not applications, so they don't care about giving away applications software. If someone said (to IBM), 'hey, you should give away content management systems and make the whole thing completely open source,' they probably wouldn't do that because they want to make some money on that software. Any area where you are looking to generate revenue and profits, you can't afford to go open-source. Nobody has proven, that I am aware of, that you can go fully open-source and make money in the long term. Red Hat is in the services business. But we are not in the services business, we're in the software business.

How are things going on the business software front, with things like Live Cycle and ColdFusion?
Chizen: Pretty much as expected. This past year, we were a $200 million business (in this area). Had we been a standalone enterprise software company, the world would be writing about us. Unfortunately, in a relatively larger $3 billion company, that's still a small number. It was 8 percent of our business last year. We've had a number of things working against us. (With Live Cycle) we've had to do a lot of hand-holding to get customers up and running. It's only now that we are beginning to have enough customers to talk about as real success stories. With the launch of Live Cycle 8 later this spring, you will have, for the first time, fully integrated servers with one installer and one administrative panel. And we've incorporated the ability to do Flex data capture. My belief is that, despite the fact that we have been growing nicely, once we release Live Cycle 8 we will be set for interesting movement.

Also, we are embedded in SAP's NetWeaver software. If you want to do an interactive form in NetWeaver, you have to go through Adobe's technology. If you want to change that form, you have to buy something from Adobe or SAP. It's only recently that people have started using SAP applications on top of NetWeaver, so that is clicking for us. It's exciting, it's just taken a long while for it to take off. Again, it's not a surprise and if we were independent...you think about Salesforce.com, a $500 million company, and the world thinks they're perfect. And, fortunately, I have too many businesses to talk about.

Going forward, what will be the important new markets for Adobe?
Chizen: Video. And when I say video, it's not just editing, it's the entire work flow. Real-time editing, post-production, streaming, DRM, delivery...so, end-to-end video for the professional and the serious hobbyist. And for the casual home-based user, depending on the economics there.

The second big focus is making sure that everything we do extends into non-PCs. So that mobile business, besides getting royalties on the devices, we (make money by selling) servers to the carrier that optimizes the content to be delivered in an elegant way to those devices. We expect by the end of the year there will be a major carrier here in the U.S. that will deploy a Flash Cast-based service. The enterprise will continue to be a big focus for us. Real-time collaboration. And some new things like digital books, and some of the host-based apps we have talked about, leveraging ad-based models.

When I think about Adobe, there are our core businesses: Creative apps, the enterprise, Acrobat. And then there is just a whole series of little experiments going on that are really cool. We have so much technology now to play with. From a synergy perspective, Macromedia added a lot to what Adobe was doing and Adobe added a lot of scale to what Macromedia had hoped to do.

More Newsmakers

[LarryLo]

Good for you Adobe!

I am an Adobe fan and have been for years.

Reading this interview I see they have some smart forward thinking people there.

I love the MS Quote (They don't use their own technologies in their website...hahahaha).

Adobe seems to be an example of a company doing the right things to make money without extorting their users.

[Below Meigh]

...bad for designers

Adobe no longer patches problems as often. Instead, Adobe has moved to an "Upgrade" mission. That is a feature set you need? No problem, we'll not bother fixing it, but instead put it in our nth Suite release!
They monopolized the illustration and web-design market by taking over Macromedia. They act high-than-thou with Apple users (e.g. Every app under OS X uses Apple-H to hide menus...all but Adobe).
Adobe got into bed with MS to force users to throw out thousands of dollars worth of type families and embrace their new (order) of Opentype. All because they would not meet Apple on licensing PostScript/Display Postscript. So Apple made it's own dfont and it's been a PITA for designers.
Adobe is an example a company that is getting too big for its britches.
Adobe likely caused Apple to lose millions in sales by delaying the release of a universal binary for the intel-macs. How long has it been? 2 years? And now, this month (but will ship in April) they are releasing CS3?
Oh, and their authorization scheme is another sign of control. The next one is the "terminal-server" approach to licensing an online, "Live Photoshop" where the consumer pays to connect and via browser, use photoshop. And laugh at those that paid the full amount...
I welcome Gnome. And LineFormX. And pdf programs. And I hope Adobe pays a price for ISO approval with pdf.

[jeph4e]

A Year Late - People look to smaller companies because you move too slow

Having to wait a year for a Mactel solution is just stupid on
Adobe's part.

Most folks who invested (as most had to move to current Apple
hardware due to various reasons) we ticked off at Adobe for not
having *anything* to help Rosetta apps be less crash happy.

We've moved away from many Adobe apps at this point and
unlikely to trust them in the future. Kudos to Quark for getting
back in the game.

[LEOPiC]

Quark back in the game?

Like if.... be realistic, Quark is long time dead, it's complicated, it's ugly and not practical, it only is, if you have been using it for more than 3 years, then again PEARL programmers will never leave PEARL, just because they think it's superior, not because it really is...

[jeph4e]

Quark is the Game

Look if you're in publishing/ad/media - Quark still owns a
mighty nice size of the market.

And yes it is all those negative things - but it is a lot less crash-
happy than InDesign under Rosetta.

My point is Adobe could have addressed this a long time ago but
were just too interanally focused. No doubt it will be a suite of
great products but they could have addressed some issues prior
to May '07

Adobe got freehand and own illustrator and corel stopped
coding for the mac.

[LEOPiC]

gnome, lineforms...

You can not really compare open-source hobbied based applications (I AM NOT saying all of them are) to the power/quality of a Photoshop and... just so you know this morning I was prompted to update my Camera RAW Plugin, I use Photoshop CS2 and well, I did not take a NEW Suite to update that... did it ?

[azareus]

interactive mind

flash is great for creating extensible web apps and unlocking the interactivity of the mind. even improving the brain.
<a class="jive-link-external" href="http://brain.com" target="_newWindow">http://brain.com</a>

[Eggs Ackley]

Not if they're running Linux

<i>"If there is one killer feature in the new version of Photoshop that is not in the open-source product, people will want Photoshop."</i>

[Penguinisto]

...or OSX, or Windows...

Seriously - it had better be "killer" enough to justify the costs;
otherwise I'll stick with GIMP, which does pretty much the whole
schmiel, thanks much.

/P

[James verDoorn]

Adobe Reader - Kinko's link

It truly is Adobe's game to lose and one way to do that is by
offending their loyal customers.

Adobe should have known that adding a direct link to Kinko's in
the new Adobe Reader was a slap in the face to the thousands of
professionals that have purchased their software thru the years.

Most printers and graphic designers rely on Adobe software
when emailing proofs to our clients.

I, for one, do not want my clients to be required to use software
with a link to Kinko's in order to view the proofs I have created.

This was an outrageous decision.