“Are you sure it isn’t photoshopped?” – The journey of Adobe

Adobe is one of those rare companies whose product (Photoshop) has become a verb. This Digital Dribble article aims to take a deep dive into Adobe’s history and understand what makes the company the behemoth that it is today. The reason we’re discussing Adobe is because of several factors- the primary being its improvement in ranks over the years and the fact that we wanted to choose a company that is not ranked in the top 200. This is because of the human tendency to only focus on the best of the best and ignore the underdogs.  Adobe has continuously impressed everyone with its growth and tenacity, and this article aims to analyze everything from the company’s strengths and weaknesses to the reasons for its success. 

Currently, Adobe has an excess of 25,988 employees, its Net Income is US$ 4.82 billion, and its Revenue is US$ 15.785 billion with operating costs of US$ 9.983 billion.

Source: Forbes Website

History

Adobe, like many other billion-dollar companies, had a humble beginning. It was founded in the garage of John Warnock, one of the founders. The company is named after Adobe Creek, which is a 23-kilometer-long stream originating in Santa Clara County, California, that flows behind Warnock’s home.

Growth Drivers (in India and the World)

One of the key drivers of growth for Adobe is the overall growth of digital marketing in India and around the world. Digital marketing is set to grow with improving disposable incomes and internet penetration in India as well as around the world. The need for digital tools is rapidly increasing and Adobe excels at making them. This will ensure that Adobe products are used continually, essentially making them perennial.

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Product Division

Adobe has a wide variety of product lines that have enabled it to become the market leader it is today. Adobe’s website prudently allows classification by dividing its entire product category into four broad labels:

A. Creativity and Design

B. Marketing and Analytics

C. PDF and E-Signatures

D. Business Solutions

 These four are further sub-divided into several different segments, and the complete product segmentation is given below:

A. Creativity and Design

  1. Design (Notable Products: Photoshop, Illustrator, InDesign, Aero, Adobe XD, Behance, Dimension, Dreamweaver, Dimension)
  2. Photography (Notable Products: Lightroom, Photoshop Elements, Lightroom Classic, Creative Cloud for Desktop and Mobile, Stock)
  3. Video and Audio (Notable Products: Premier Pro, Premier Rush, After Effects, Anywhere, Photoshop Camera)
  4. Web and UX (Notable Products: Animate, Comp, InCopy, Adobe Spark, Spark Page, Spark Post)

B. Marketing and Analytics

  1. Advertising (Notable Products: Advertising Cloud, Experience Cloud, Media Optimizer and Dynamic Creative Optimization)
  2. Analytics (Notable Products: Analytics, Analytics Cloud, Audience Manager, Experience Cloud)
  3. Marketing (Notable Products: Campaign, Experience Manager, Primetime, Target)

C. PDF and e-Signatures

  1. Documents (Notable Product: Document Cloud)
  2. E-Signatures (Notable Products: Acrobat Pro DC, Adobe Sign, Adobe Sign Mobile App, Fill and Sign)
  3. PDF (Notable Products: Adobe Scan, Acrobat Pro 2020)

D. Business Solutions

  1. ColdFusion (Notable Products: ColdFusion on AWS, ColdFusion Standard (2018))
  2. E-Learning (Notable Product: Captivate)
  3. Enterprise (Notable Products: Creative Cloud for Enterprise, Document Cloud for Enterprise)
  4. Print Imaging (Notable Products: Design to Print, Adobe Embedded Print Engine, Adobe PDF Print Engine, Adobe PostScript)
  5. Technical Communication (Notable Products: Technical Communication (2019), XML Documentation for Adobe Experience Manager)
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Therefore, it is evident that Adobe has a huge stockpile of products that it uses to maintain its market dominance over its competitors. The four major areas that are mentioned above cover hundreds and thousands of businesses and individuals, and Adobe has successfully used that factor to market its products and successfully reap benefits from it.

Mergers and Acquisitions

Mergers and acquisitions are important for an organization from a growth perspective. They change the way the business operates strategically now as well as in the future. Adobe has, over the years, acquired all kinds of companies including those that were themselves considered giants. Some of Adobe’s notable acquisitions are listed below:

Name of CompanyAcquired onAcquired for (in US $)
MarketoSeptember 20184.75 billion
MacromediaDecember 20153.573 billion
OmnitureSeptember 20091.8 billion
MagnetoMay 20181.68 billion
FotoliaJanuary 2015.8 billion
NeolaneJuly 2013.6 billion
Frame TechnologyOctober 1995.57 billion
  • The quintessential and ubiquitous Adobe PDF that we see and use all around us has been made possible by several key acquisitions by Adobe over the years-
    • OCR Systems (1992)- The technology of this company made it possible to manipulate the documents that were scanned into PDFs.
    • Aldus Corp (1994)- This merger helped bring PDFs to desktops.
    • Accelio Corp. (2002)- This company’s server-based technology is implemented in Adobe LifeCycle Design.
    • Macromedia Inc. (2005)- Many of Adobe’s PDF features like mobile PDFs, media-rich PDFs, or online collaboration would not have been possible without this company
  • Adobe added Behance to its creative cloud community strengthening further its hold over the industry
  • By integrating Adobe Sign (EchoSign) into its ecosystem of products, Adobe ensured that one of the pain points- the inability to electronically sign PDFs was addressed.

Marketing Strategy

Adobe uses a strong content marketing strategy to bolster its position in the industry. The result has been nothing short of spectacular for Adobe. In 2018, it crossed several key landmarks, the most impressive of them being exceeding a market capitalization of $ 100 Bn. With its ‘always-on’ marketing, Adobe constantly reviews and analyses marketing data rather than spending crucial time building the perfect marketing plan. This allows the company to change whatever is needed while on the go, thereby making it much more agile. This policy has enabled the company to craft strategic marketing campaigns, fine-tune these strategies, and adopt effective practices.

Factors That Made Adobe Successful

It becomes important to understand the reasons behind the success of Adobe as a company, and that can be best done by using a couple of tools that help in analyzing the company as a whole.

Competitor Analysis of Adobe

This section analyses the position of Adobe and where it stands along with its competitors. The problem with a company like Adobe (which is also its strength and competitive advantage) is the fact that no other competitor offers a diverse bouquet of products that are so uniquely related in a common ecosystem as Adobe. Hence, to do a competitor analysis, different companies that belong to different sectors and segments need to be brought together.

SWOT Analysis of Adobe

Strengths

  • One of Adobe’s key strengths was its ability to transition from a perpetual licensing system to a subscription-based licensing system. This led to an increase in their ARR (Annualized Recurring Revenue) which will help provide the company with reliable cash flows in the future.
  • Adobe products are used and preferred all over the world, thereby adding to its brand equity. Its strong global presence can be rivaled only by a few of its competitors. Few of Adobe’s competitors have been able to consolidate a vast array of products under its portfolio as effectively as Adobe has.
  • Adobe distributes its offerings through a network of value-added resellers (VARs), original equipment manufacturers. (OEMs), a detailed network of distributors and independent software vendors (ISVs)
  • Adobe has an almost pure monopoly when it comes to designing, as Photoshop overshadows its competitors by miles. Similarly, Adobe caters to the film, web development, and the video game industry, to name a few.
  • The Adobe brand has been growing over the years and is now perceived to be a trusted one amongst designers and other users. It has steadily captured the market share by defeating all of its rivals.

Weaknesses

  • The primary weakness of Adobe is its high price which deters many potential customers Adobe products are sold more in developed markets and less in emerging ones.
  • Poor customer service is also one of the key weaknesses of Adobe.
  • Adobe’s poor presence in the video animation industry, especially in 3D modeling is also a potential weakness as it is an empty void that competitors can now fill.

Opportunities

  • With the increase and growth in industries like digital marketing, PR, branding, and a host of other industries, Adobe still has plenty of room to grow and expand globally.
  • The increasing demand for cloud computing coupled with the subscription model can lead to increased profitability for the company. Adobe Creative Cloud desktop apps are a set of Adobe products that give the user control to a set of applications that have optional cloud services as well. Adobe needs to expand on this cue.
  • Adobe and Microsoft have entered into a strategic alliance wherein each company will help the other in transforming businesses globally by leveraging the latest developments. Adobe has chosen Microsoft’s cloud platform Azure as its preferred choice for its cloud offerings- Adobe Document, Creative, and Marketing clouds.
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Threats-

  • The major threat for Adobe is the threat of piracy due to the thriving torrent sites and peer-to-peer networks. This severely harms the company as it essentially is robbed of its revenue. This mostly happens in emerging markets like Russia, Africa, Pakistan, and India.
  • There are several substitutes for Adobe products that are either free or cost minimal to purchase. Some of the best Photoshop alternatives are- Luminar, GIMP, Pixlr, and Paint. 
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  •  Security threats are another set of worries that Adobe has to carry around with it all the time. Adobe has a lot of information about its customers, which is confidential. Hackers often try to attack Adobe servers, and they also are continuously developing malware and viruses for this very purpose. This also harms the brand image that Adobe has so painstakingly created over the years.

Reasons for Adobe’s Success in India

Adobe has gained a lot of traction in India, and in addition to the growth drivers mentioned above at the start of the article, a few key pointers that need to be highlighted

  • Adobe earned a spot in the Top 10 Best Places to work in India in the year 2019 and came in at a respectable 7th.
  • In 2018, Shantanu Narayen, the CEO of Adobe India, won the Global Indian of the Year. Shantanu has been with Adobe for a long time and has helped it in its key projects like the transition to a cloud-based subscription model rather than one-time licensing software.
  • Adobe first came into the country in the year 1997 and as of 2017 has more than 5,200 employees across four campuses in the cities in the cities of Bengaluru and Noida.
  • The India business for Adobe is one of its fastest-growing in the Asia Pacific regions
  • The strong growth is spearheaded by growing industries such as education, e-learning, fintech, insurance and retail.

Evergreen market

The picture below proves that Adobe’s very business model and the products it has been dealing with have suffered little to no consequences because of the global pandemic. Being largely digital products, they can be facilitated over the internet and the need for digital marketing and associated activities is always on the rise thereby contributing to the company’s revenues even during a global pandemic.

Want to read about how COVID-19 affected business strategies for other companies? Check out this Digital Dribble article.

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