Adobe Systems Inc's decision to turn to the cloud market was not an easy one, detailed a Reuters report today. A growing number of customers are now opting to go with Adobe and other software institutions' upstart rivals who can deliver software over the Web instantly, resulting to slowing purchases of Adobe products. According to the Reuters report, Adobe's leadership in desktop publishing has been threatened despite the premier products it holds like Photoshop, Illustrator and InDesign.
Starting with a five-day meeting by top executives of the software company, the following management meetings had led to Adobe's decision to drop is lucrative licensing business and invest in Creative Cloud, a monthly subscription offering.
Market research firm IDC said Adobe was not the only one who had made a decision to turn into the cloud space. Other vendors including Microsoft Corp, Oracle Corp and SAP AG reportedly shifted their strategies to obtain a significant market share in the cloud software market worth USD36.8 billion. IDC also added that the cloud segment will balloon to a USD67.3 billion market by 2016.
An Adobe senior vice president, David Wadhwani, said, "It was probably one of the most important moments in the company's history. I don't think this was one where we were going to increment our way to the right solution." Wadhani was one among the executives who had attended the August 2011 meetings.
Despite seeing its stock doubled in the last two years, former industry leader Adobe is now observed playing catch-up to more younger and popular companies like Workday Inc and Salesforce.com Inc. Analysts predicted that Adobe will experience a 8.2% drop in sales and a 65% loss in net income for 2013, based from data collated by Bloomberg.
An unnamed source that Adobe's decision met resistance from a faction of executives. Wadhani also said that concerns about the stability of jobs among salespeople and developers were brewing that time.
UBS AG analyst Brent Thill said, "Adobe and Microsoft have been two favorite old-school names who we thought could make the transition faster.
Commenting on Adobe's decision to focus on subscriptions even though profits were unfavorable, Thill said, "They basically threw in the towel. They damaged the financials by hurting short-term performance for long-term gains."
Adobe is said to unveil its earnings for its fiscal fourth quarter on December 12, of which, Bloomberg said, will give an idea about the software company's progress after shifting to the cloud.
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