September 16th, 2009

Adobe ties web design to business results

Posted by Phil Wainewright @ 6:03 am

Categories: Adobe, Content management, Omniture, Web 2.0

Tags: Adobe Systems Inc., Web, Software-as-a-service, Omniture Inc., Web Site, Web Design, Software As A Service (SaaS), Managed Hosting, Cloud Computing, Web Site Development

The more I think about Adobe’s decision to acquire Omniture for a mouthwatering $1.8 billion (Techmeme coverage), the more it feels like a smart move (though I know others are wondering how the deal makes sense). The growth of SaaS and cloud services gives Adobe a looming problem, which depends for its revenues on sales of conventionally licensed software, most of it to the creative people who design corporate websites. Even if those users turn out to be the last people on earth to switch their allegiance to cloud-based applications (as well they might), they’re still going to slow their spending on licensed alternatives in the meantime. Adobe needs a way to tap into the faster growth that’s available from online solutions, and Omniture, which I once named one of The four horsemen of SaaS, will help it jump on the gas.

By the way, some financial analysts are saying Adobe overpaid because competition from the free-of-charge Google Analytics service is already putting Omniture’s revenues under pressure. I don’t think the analysts who are saying that really understand much about business. Omniture’s core customer base are enterprises that spend huge amounts of money on web marketing and their online presence, and who want to measure the effectiveness of and return on that spending. They’re going to rely on a free-of-charge service for such a critical business process? One that’s provided by the same company that accounts for a large proportion of their online ad spend? Puh-leeze!

But back to why Adobe made this move now. Its existing strategy, which I described last year in a post on SAP, Adobe, Microsoft: three monkeys take on SaaS, has been to develop a new line of collaborative applications that compete on Microsoft’s turf rather than cannibalizing its own licensed revenue stream. That strategy continues, but it’s inevitably taking a while to build it out. Hence the decision to open a new front in the company’s transition into online services.

Omniture makes a superb fit for reasons Read the rest of this entry »

June 17th, 2009

Adobe morphs the online spreadsheet

Posted by Phil Wainewright @ 7:51 am

Categories: Adobe, Business models, Collaboration

Tags: Adobe Systems Inc., Financial, Spreadsheet, Financial Model, Productivity, Phil Wainewright

One thing I found especially interesting about Adobe’s new Acrobat.com announcements this week (Techmeme coverage here) is its hybrid spreadsheet/database application called Tables.

I already discussed Adobe’s subscription model in another post earlier this month, What your bank can teach you about freemium, so I won’t elaborate on that aspect of the announcement beyond mentioning that we can now start to make a judgement whether Adobe has followed my fourth guideline, “Price for value.” Here’s the verdict from CloudAve’s Krishnan Subramanian: “The frugal minded SaaS user in me thinks that this price is steep compared to Adobe’s competitors but there may be others who would like the user interface and may be willing to pay big money for it.” That suggests, given there are still a set of services available for no charge, that Adobe has got the pricing more or less at the right level. I suspect we’ll see some more developments as the offering matures, too, which may add to the perceived value of the subscription plans.

I’ve called Tables a hybrid because, although its user interface is that of a spreadsheet, its function set is focused on tabular manipulation of rows and columns, which makes it more like a database than a financial modeling tool. Briefing me about the announcement, Erik Larson, director of marketing and product management, told me: “We’re not going to build a big financial analysis engine. It’s much more about collaborating on data with other people.”

Adobe has developed the application this way, Larson explained, because its research found that the most common form of data in shared spreadsheets is tabular. Financial models are more likely to be an individual undertaking — someone sits down in front of the spreadsheet and then builds the model. Read the rest of this entry »

June 1st, 2009

What your bank can teach you about freemium

Posted by Phil Wainewright @ 4:08 am

Categories: Adobe, Business models, Collaboration, Web 2.0

Tags: Bank, Adobe Systems Inc., Adobe PDF, Premium Service, Acrobat.com, Financial Services, Phil Wainewright

People are talking and writing a lot about freemium just now as if it’s a completely new business model that was invented for the Web. The term, apparently coined in response to a 2006 blog post by Fred Wilson, describes a business that delivers services or content for free to gain users, and then makes its money from charging for extra services that a subset of users are willing to pay for. The key to the model is to have an attractive-enough free-of-charge offering that spreads rapidly but doesn’t cost too much to run, and a compelling set of premium services that a substantial minority of users will want to pay for. Some of the commentary around freemium in the past week has been prompted by startup Contenture’s plan to offer freemium as a service to commercial websites, which prompted TechCrunch’s MG Siegler to list the services he’d be willing to pay a modest annual fee to use. Social media blogger Nick Barker wrote a thoughtful blog post about the model late last week and Adobe’s Acrobat.com initiative is also relevant, for reasons I’ll circle back to later in this post.

It seems to me the financial services industry perfected the freemium model many years ago. There was a time when people used to pay an annual fee to have a credit card. Some cards still do carry a charge, but most mass-market card providers these days are all too happy for you to sign up for one of their cards without paying for the privilege. Their ‘freemium’ model is amply funded by the huge margins they earn as soon as you start paying interest on your outstanding balance. Sure, a minority of customers keep their noses clean and pay off the full balance every month, avoiding interest, but even most of them make a mistake every so often and miss the payment date, which earns a penalty fee as well as a tidy interest charge.

This long-established model has several important lessons that Web businesses should heed as they develop their freemium offerings:

• Learn to target your free offering. Credit card providers don’t waste their time marketing to people who never borrow. Their ideal cardholder is a shopaholic who holds down a good job — someone with a reliable income stream who’s always spending rather than saving. Freemium providers should remember they’re aiming to capture users who will spend money on premium services. Don’t waste time trying to sign up the largest possible number of free users — acquire too many and they’ll become an unnecessary burden. Once you’ve understood your target market, cultivate it.

Read the rest of this entry »

November 8th, 2007

Web collaboration: Cisco and Adobe duke it out

Posted by Phil Wainewright @ 4:16 pm

Categories: Adobe, Business models, Ecosystems, WebEx

Tags: Adobe Systems Inc., Web, Web-based Collaboration, Software-as-a-service, WebEx Communications Inc., Collaboration, Cisco Systems Inc., Software As A Service (SaaS), Emerging Technologies, Phil Wainewright

A fascinating juxtaposition of keynotes from Cisco and Adobe have kicked off proceedings today at the SIIA On Demand Summit in San Jose, which I’m attending as a speaker [disclosure: I'm also on the steering committee for the event, but have paid my own way to be here]. These two companies’ SaaS strategies are going to have a huge influence on the future development of software as a service and on-demand applications, so getting an insight into their current intentions has been a great way to start the day.

First up, Donald Proctor, who is senior vice president of the collaboration and sofware group at Cisco — the division encompassing WebEx, acquired earlier this year, and now Securent acquired last week [further disclosure: WebEx is a client]. His primary message is really the same message that WebEx honed as an independent company: “The next wave of collaboration will be driven not in the context of intranets but in terms of [the] Internet.”

That’s already happening of course out in the real world, where organizations are already working with partners, customers and stakeholders and making increasingly intense use of subcontractors, global sourcing and other non-internal business resources. But the technology has not kept pace. When people ask him who Cisco’s competitors are in the collaboration space, Proctor says he answers with a question: “How do most people collaborate today?” To which he rhetorically replies, “Email attachments … Email is the only tool we’ve had historically for collaborating across the firewall.” That creates a huge underserved market that’s ripe for a new set of collaborative products.

Elaborating on that point, his message for the audience here — almost entirely software companies either in the SaaS business or planning to get into it — was, “The next wave of software as a service Read the rest of this entry »

October 3rd, 2007

SAP, Adobe, Microsoft: three monkeys take on SaaS

Posted by Phil Wainewright @ 2:52 pm

Categories: Adobe, Business models, Microsoft, SAP

Tags: Strategy, Revenue, Adobe Systems Inc., Software-as-a-service, Problem, Product, SAP AG, Microsoft Corp., SaaS', Software As A Service (SaaS)

The challenge: transition from a business model where you earn revenues by selling perpetual software licenses to one based on monthly subscription payments. Not only that, but achieve the transition while continuing to report rising revenues and protecting your profitability. Can it be done? Steve Singh, CEO of Concur, has led his company through the transition and is doubtful any public company above $1 billion in annual revenues has a realistic chance of succeeding.

Three of the world’s largest software companies — SAP, Adobe and Microsoft — have other ideas. Instead of facing the painful disruption of replacing their existing products with SaaS alternatives, they plan to enter other markets with new SaaS offerings that don’t compete with those existing products. Once they’ve built up a separate revenue stream from subscription services in these new markets, the theory is that they’ll then have a cushion to lessen the pain of transitioning their conventionally licensed products to SaaS, should they need to later on.

There are three variations on this ‘SaaS containment’ strategy. Each has its own merits, but the flaw they all share is a determination to put off the evil moment of facing up to the impact of SaaS on their core business. So I’ve chosen to name them after the proverbial three wise monkeys who ‘See no SaaS’, ‘Hear no SaaS’ and ‘Speak no SaaS’.

Adobe: ‘See no Saas’. The market leader in publishing, design and web development software has just launched the first of a family of services that will target a product segment Adobe doesn’t currently serve. Online word processor Buzzword, whose acquisition was announced this week, will head a portfolio of collaborative editing and publishing services for the office productivity market. It’s a bold plan, aimed at a market where Microsoft alone currently earns revenues of some $16 billion a year. Read the rest of this entry »

October 1st, 2007

What you see is what you publish

Posted by Phil Wainewright @ 8:32 am

Categories: Adobe, Collaboration, Rich Internet Applications, Web 2.0

Tags: Adobe Systems Inc., Application, Document, Google Docs, Microsoft Corp., Buzzword, Flash, Adobe Share, What-you-see-is-what-you-publish, Word Processors

Adobe’s acquisition of Virtual Ubiquity and its Buzzword online word processor brings Adobe into direct competition with Microsoft and Google in the Office 2.0 space (or as Scoble sensibly retitles it, Work 2.0). But much more more significant in my view is what Buzzword tells us about the nature of online documents and the applications we’ll use to create them. Adobe has a quite different heritage from its two main competitors and that shines through in today’s announcements (all Techmeme coverage here).

Compared to other online word processors, Buzzword is a revelation (see screenshot gallery). In concept, it is to Google Docs what Microsoft Word once was to WordPerfect — a comment that probably means little to anyone born after 1975, but which goes to the issue of heritage. Google Docs is a good first-generation attempt at putting document editing online, but it’s hampered by a restrictive environment and too much emulation of earlier offline products, in particular Word — for similar reasons, the pre-Windows WordPerfect lost its market leadership to Word back at the start of the 1990s.

Adobe’s credentials stretch back even further, to the early days of WYSIWYG (what-you-see-is-what-you-get) desktop publishing software on the Mac and then on Windows. But until now, it’s never released a general office productivity application. Instead, it’s spent its time honing online skills and technologies, in particular its PDF document exchange format and all the Web publishing acumen and accompanying Flash technology that it acquired when it bought Macromedia.

All that heritage comes together in Buzzword, which provides a compelling showcase for Adobe’s technologies. Maybe Buzzword will prove to be the ‘killer app’ that establishes Adobe’s Flash and AIR technologies as the default user interface environment for the Web, just as Excel and its ilk ensured the dominance of Windows. But it’s a little too early just yet to predict Buzzword’s success. It shows us what Web applications are likely to look like in the future:

• Social
• Visual
• Produce finished results
• Enhanced by paid services
• Able to run disconnected

Currently, though, there are big gaps between what Buzzword seems to promise and what it actually delivers. Read the rest of this entry »