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Get Big Fast

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Adobe kept updating the software by launching newer versions such as Acrobat 2.0, ... By 2000, 20% of sales revenue for Adobe was from Acrobat family. ... – PowerPoint PPT presentation

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Title: Get Big Fast


1

Adobe Systems Inc.
2
Index
  • Introduction
  • History of the Company
  • The Expansion Phase
  • Industry Overview
  • Get Big Fast
  • Trouble in late 90s
  • Recovery and success story

3
Introduction
  • Adobe Systems Inc. is a leading developer of
    desktop publishing software.
  • Software products--Photoshop, Illustrator, and
    PageMaker.
  • Acrobat Reader, which allows Internet users to
    view and print portable document format (PDF)
    files free of charge.
  • Caters to PC manufacturers, designers, publishing
    houses and end consumer.

4
Origin.
  • Founded in 1982 by John Warnock and Charles
    Geschke.
  • Both former employees of Xerox Corp.'s Research
    Center.
  • Warnock conducted interactive graphics research,
    while Geschke directed computer science and
    graphics research.
  • Reason for start up- Frustrated by Xerox's
    policy of keeping the technology proprietary,
    because of the difficulty in getting the products
    out of the research stage.

5
Origin.
  • Believed that opening a new venture which would
    commercialize technology will be profitable.
  • Bill Hambrecht, one of Warnocks advisors helped
    fund the venture.
  • Named the company after a local creek.

6
The Post Script Era
  • Introduced PostScript, a powerful computer
    language that essentially described to a printer
    or other output device the appearance of an
    electronic page, including the placement of
    characters, lines, or images.
  • Post Script supported multiple resolution, i.e
    same software application could print on a 300
    dpi laser printer as well as on a high end 5000
    dpi image setter.
  • Users could produce polished, professional-looking
    documents with high-quality graphics.
  • Adobe marketed and licensed PostScript to
    manufacturers of computers, printers, image
    setters, and film recorders

7
Post Script Era
  • In order to encourage the use of post script,
    Adobe gave it for FREE!!!
  • Strong technical support was provided to third
    party users for proper usage of post script.
  • In 1985, Apple Computer, Inc., maker of the
    MacIntosh computer, incorporated PostScript for
    its LaserWriter printer

8
Post Script Success..
  • The applications supporting Post Script increased
    from 180-1986 to over 5000 -1991.
  • In 1986, Adobe signed an agreement to supply
    Texas Instruments Inc. with the software for two
    of its laser printers, producing the first
    PostScript-equipped printers made for use with
    IBM-compatible personal computers.
  • Used by corporations, professional publishers,
    and the U.S. government.
  • Became one of the most ubiquitous computer
    languages worldwide.

9
Cont. ….
  • To supplement Post Script, adobe introduced a
    software technology known as Type1, which
    provided digital type fonts that could be printed
    at any resolution.
  • 1986 went public to include the customer base
    of IBM and Digital Equipment Corp.
  • 1987 the company introduced the Adobe
    Illustrator, a design and illustration software
    program enabling users to create high-quality
    line drawings.

10
Cont…
  • Acquired Photoshop, for digital image editing in
    1989, and Aldus Page maker in 1993.
  • A breakthrough in the long struggle for what
    computer buffs called 'WYSIWIG' (What You See Is
    What You Get)
  • Ownership and leveraging of Post Script brought
    huge returns
  • Sales 2.2 M - 762 M from 1985-1995.
  • Compound annual Growth rate of 70
  • Share price increased by approx 30

11
Expansion Phase
  • Next on Agenda- International Markets.
  • Company signed an agreement with Canon Inc. of
    Japan, leading manufacturer of laser printers,
    under which Canon had full licensing rights to
    Adobe PostScript.
  • Introduced Adobe Type Manager, used Adobe's
    outline fonts to generate scalable characters on
    screen.
  • Success reason- Strategy of marketing and
    Licensing technology to original equipment
    manufacturers such as Apple.

12
PDF (Portable Document Format)
  • Introduced the first version of Acrobat on June
    15, 1993.
  • Enabled users to convert electronic document into
    a universal document which could be displayed and
    printed as it had in its original application.
  • Also supported graphics and images.
  • Initial Cost for Acrobat Reader was 50 each.
  • Acrobat Exchange _at_ 195/- or Acrobat Distiller _at_
    695/-

13
PDF
  • Initial sales were low which came as a surprise.

  • Change in strategy to provide the reader for
    FREE..
  • Goal was to set reader as a standard for
    exchange of documents on the internet.
  • The strategy proved fruitful and acrobat got
    great publicity.

14
Marketing PDF
  • 1994, AOL made it available to its users.
  • Relationships with computer vendors such as
    Compaq, Dell and Sony to preload reader on PCs.
  • 1995, free download was available from Adobe.com
  • IRS forms first available online in 97 were in
    PDF.
  • Cashed the opportunity of the need of document
    Integrity along with online presence.

15
PDF Success and enhancement
  • By July 2000, 197 million readers had been
    downloaded.
  • 11 million unique visitors for Adobe.com
  • Adobe exploited the huge traffic on the website
    to sell bundled products.
  • Adobe kept updating the software by launching
    newer versions such as Acrobat 2.0, 4.0 and so
    on.

16
Success Cont.
  • 1999, targeted office users by launching Adobe
    Business Tools.
  • The aim was to facilitate the usage of the
    electronic documents within an office.
  • Allowed business users to mark up PDF documents
    electronically, digitally authorize and sign
    documents.
  • An attempt to offer value proposition to B2B
    process.

17
PDF Enhancement
  • Adobe Distiller, enabled high volume conversion
    of post script data into PDF format.
  • PDF Merchant, August 1999 , server based
    technology to enable websites to sell documents
    without the fear of illegal copying.
  • It encrypted PDF files which were then unlocked
    through web buy.
  • Sold Merchant for 5000, plus transactional
    royalty in an amount equal to 2 of the
    transaction or .05, which ever is greater.

18
PDF Success..
  • Fall 2000, 100 million copies with web buy had
    been downloaded.
  • Sales of Acrobat had taken off and increased over
    100 between 98-99.
  • By 2000, 20 of sales revenue for Adobe was from
    Acrobat family.
  • Widely used among government and private sector.


19
Ebook market
  • Primarily used for electronic reference manuals.
  • Spread to PDAs for professional reference
    material.
  • Increased publicity in the text book market due
    to features such as customization and keyword
    searches.
  • Overall performance was still under question.

20
Value to Players involved
  • Authors
  • Ability to bypass the publisher and get straight
    to consumer through website
  • Unknown authors could publish without screening.
  • Publishers
  • Reduction of the major costs of printing,
    warehousing and distribution.
  • Online Bookstore
  • - Different revenue models such as subscription,
    per book charge or advertising model.
  • Device Manufacturers
  • - Convenience and different market segment
    benefits


21
Adobe Vs Microsoft
  • Microsoft was one major competitor in the ebook
    business followed by Gemstar.
  • Both were pursuing relationships with publishers,
    hoping to pre-empt alterative formats.
  • Besides Microsofts exclusive deals with major
    publishing house was not a threat because of
    first mover advantage and reputation.
  • Other major chases were for BarnesandNobles.com,
    Simon Schuster, Amazon.
  • Adobes Acrobat had an edge over Microsofts
    reader because it was printable.

22
Trouble in late 9Os
  • Due to certain unfortunate acquisitions, Adobes
    sales experienced a downturn.
  • Revenues fell to approx 1O1M in 3Q. 1998 from
    179M.
  • Competitors such as Microsoft Corporation took
    away precious market share.
  • In 1997 Hewlett-Packard chose to stop licensing
    PostScript from Adobe when it developed its own
    clone version of the software.
  • Economic recession in Asia, sales in Japan, one
    of Adobe's stronger markets.

23
Recovery..
  • Company planned to eliminate about 12 percent of
    the work force, about 300 people, including
    several top executives.
  • Concentrate more heavily on corporations and
    businesses, which represented a wider and more
    profitable market.
  • Adobe successfully fended off QuarkXpress
    professional publishing software, attempt for an
    hostile takeover.
  • Huge investments in marketing efforts.

24
Recovery.
  • In 1999, introduced new version of Photoshop, Go
    Live, Press Ready, Active Share, and In Design
    high end design software.
  • Record sales of 267M in 1999 and 1 B in 2OOO.

25
Get Big Fast…
  • Network effects
  • Extremely strong business goal was to make a
    standard which is impossible without network
    effects.
  • Economies of Scale
  • Increased number of users result in spreading of
    costs and basis .
  • Customer Retention
  • - Cost of switching, walled garden, one stop shop
    etc.

26
Some concerns facing Adobe
  • Should Adobe concentrate more on the
    international markets than Americas?
  • Most of the companys products are in their
    mature stage, given the fact that they have been
    updated several times in the past. Moreover, for
    such products it is difficult to keep updating
    them by constantly adding new features without
    customers becoming suspicious.
  • Where to compete with giant Microsoft and where
    to back off, is offering FREE really working?
  • Self destruction to due increased size and
    functionality.

27
Why Adobe Made it..
  • Significant first mover advantage over Microsoft
    and Gemstar.
  • Leading player with a strong brand name
  • Financial position
  • Strong customer loyalty and RD support
  • Strategic business alliances

28
Today
  • Adobe stays as a leading provider of desktop
    publishing software and business tools and
    solutions.
  • Adobe PostScript, Adobe Photoshop and Adobe
    Acrobat are still hottest in the market.
  • One of the major partnership are with Macromedia
    to be settled by December 2OO5.
  • Major Competitors are Quark Inc. Corel
    Corporation Microsoft Corporation.
  • Subsidiaries in Europe, Japan, Asia, Australia
    and UK.

29
Q U E S T I O N S ????/
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