Adobe Systems Inc. (NASDAQ: ADBE) announced its vision for combining services, community and applications with its Creative Cloud strategy. In addition, the company made some small yet important acquisitions that further strengthen its position in the world of open standards.
Adobe outlined its strategy to build a more comprehensive cloud offering based on services (such as web fonts), community (cloud-based storage and collaboration with digital content) and applications (based on the tablet multi-touch paradigm).
We view this as a bigger effort by Adobe to capture new users (for example consumers and in education), to create new applications and to create more recurring revenue through subscriptions. It is early days, but the initial efforts are encouraging, said Ross MacMillan, an analyst at Jefferies.
The first part of the Creative Cloud strategy is focused on common services such as pre-built packages for rapid Web site creation (Adobe Business Catalyst) and font services for Web sites (the Typekit acquisition). MacMillan would expect to see Adobe build out more common horizontal services that can be used by creative professionals.
The second part is focused on a cloud for creative content that can be accessed through any device. This cloud service is primarily a storage mechanism today, but it already provides some processing capabilities (such as visual effects on images in Adobe Carousel) and Macmillan expects these more compute intensive services to increase over time, providing higher value and stickiness for users. The service will launch next year and pricing will be disclosed in November.
The third part is focused on rethinking creative applications for touch-based devices. This is a big shift for Adobe and the company is focusing on new applications and versions of existing applications for Tablet devices.
Adobe's research suggests that 60 percent of its creative professional base has or plans to buy a tablet in the next year and 92 per cent want to do creative work on tablet devices that tether back to the core creative tools on the desktop.
Some of these have been delivered on Apple Inc.'s iOS first (such as Ideas and Carousel) and some on Google Inc.'s Android, but the plan is to offer all these applications across both platforms. The applications include: Adobe Ideas, Adobe Carousel, Kular, Collage, Debut, Proto and Photoshop touch.
Adobe announced two small acquisitions, which he views as important indicators of the commitment to open standards. Typekit is a leading online font service that allows web designers to use fonts from 60 foundries for web properties.
He views this technology as competitive with Monotype Imaging’s (TYPE) web font service. Nitobi is a leading provider of cross platform tools for developing applications for iOS and Android using its PhoneGap and PhoneGap build tools.
Adobe claims to have over 1000 publications on tablet devices that have been created and delivered through the DPS. Adobe launched a new single edition version of the product which is free to use to create an online magazine and the user in only charged at the time of publication ($395 per published issue).
MacMillan said Adobe is beginning to help delineate between applications best suited to Flash (Video, especially where digital rights management is important, and gaming) and HTML5 (web apps that are pulling most of their data from cloud based services). Adobe wants to abstract the complexity of the creative output format, the server based control and the runtimes upon which content runs.
He said Adobe continues to move more aggressively toward supporting a broader range of HTML5 output, and applications such as Muse and Edge, contributions to Webkit and the acquisition of PhoneGap are all evidence of the pace at which Adobe is moving.
Adobe sees big new user opportunities in consumer and education markets with the shift toward tablet based creative applications augmented with cloud services, said MacMillan.
Adobe stock closed Monday's regular trading down 3.76 per cent at $23.26 on the NASDAQ Stock Market.