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December 13, 2013

The Invisible Hand of the Market Confirms what Photographers Feared: The Cloud is Good for Adobe's Financials, Not So Good for Your Wallet

Adobe slashed both their revenue and earnings per share going forward, yet its stock price hit an all time high after it was announced. So what did the invisible hand of the market see that despite all that, pushed Adobe's stock up up up and away?

Investors Business Daily explains: "The move holds the promise of higher lifetime revenue per customer".

That's great for Adobe and its shareholders, but who is this mythical customer who is going to provide the "higher lifetime revenue per customer"?

The answer is... *spoiler alert* YOU!

This is not to say that the Creative Cloud subscription model is a disaster for everyone. For some people, it may make more sense. Per the Adobe quarterly numbers, as of the end of their Q4, they had over 1.44 million paying Creative Cloud subscribers. So clearly, for some people, this is at least an acceptable trade off.

However, what is also obviously clear is that the Creative Cloud subscription model is not for everyone. For some people, the conventional software purchase model and cycle makes more sense. And that's the crux of the problem: Adobe wants to herd as many people from this category into the "higher lifetime revenue per customer" Cloud subscription. And they are apparently willing to take the hit of unhappy and lost customers.

One attempt at some kind of middle ground, at least in terms of pricing, is the $10 per month Photographer Cloud 12-month contract offer which expires 12/31/13. This is a plus in terms of budgeting, but it doesn't change the dynamics for the people who prefer/want/need the conventional software purchase model.

This is perhaps as good of a time as any to start looking at alternatives. A market often tends to stagnate when one company dominates and everybody else becomes a niche-within-a-niche-within-a-niche type of a player.

Lots more on this from a business perspective via Yahoo Finance.


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