Thursday, June 21, 2012

Apple and Adobe Change the Rules



I've been in senior level Management for well over two decades both with Information Technology (IT) and in running our professional services consulting/development firm.  Part of my responsibility was to select vendors, evaluate solutions and determine product viability. I've done this for large scale enterprise systems as well as more localized development tools.

Since 1995, I've had the responsibility for selecting eLearning and media development tools for use internally as well as for our Fortune 500 clients. When doing these evaluations I look for several key components:
  • Vendor viability
  • Product features
  • Product integration with Learning Management Systems (LMS)
  • Product integration with other tool-sets (the concept of suites)
  • Pricing structures for small or large purchases
  • Product history
  • Product stability
I have often also been an adopter of new products. This simply means I'm not risk-averse. But I am much more hesitant to recommend new products to customers until I see how the product fares over the first year or so of its life-cycle.  In the past, moving too quickly on a product, specially when it was for a client, resulted in product/companies either going under or discontinuing non-selling lines. While this can always happen to any company, as a consultant, I need to tread that road very carefully for my customer's sake.

Recently, two vendors have spearheaded new trends in product pricing, deployment and development. Those vendors are Apple and Adobe.

Apple led the charge by creating the iTunes App Store and, later, the Mac App Store. All of a sudden buying software, downloading and installing it became quite simple. In fact, it was pretty much effortless.

Adobe, another software giant, reeling from the blow Apple dealt to its Flash player, needed to re-focus and re-vitalize. While this doesn't sound difficult, it can be very complex for a large company to accomplish in a short time-frame. But Adobe seems to have done just that to the dismay of many including myself.

Following Apple's footsetps, Adobe has lowered the price of its products dramatically by going with a subscription model.  This guarantees Adobe recurring revenue on a monthly basis, makes financial predictions and investments clear and allows for a consistent flow of money to pay for development and Marketing. But more than all of this, the end-user, Adobe's customers, benefit greatly from the reduced pricing and ease of implementation.

In the past, Adobe has suffered from quality issues in many of its products (mostly those that came from Macromedia). Quality issues and a lack of support from the giant vendor created opportunities for smaller companies to make small inroads in several product areas including eLearning.  But ultimately, Adobe still controlled two-thirds of the marketplace based on reputation, size and feature sets along with tight integration in their suite offerings.

Personally, I was seeing Adobe more and more as a company I did not want to recommend or use for many of the issues cited above. They passed many of my criteria for making the finalist list, but I had trepidations in recommending them. Then something changed...

Actually, several things changed...

Adobe released the CS6 suite with a new subscription model. While subscriptions are not something Apple does, the model simulated a similar end result: cost-effective software that included upgrades for no extra cost.

And Adobe showed a renewed fervor and excitement in their product lines with great innovation in the fields of graphic imaging, layout and design, and yes, even in eLearning.

Let's take eLearning as an example... The cost of Adobe Captivate 6, in a subscription model, is roughly $240.00 per year and includes all updates. Competitors with similar products are in the $1,000+ range and offer little or no integtation with other products.  Assuming quality, feature sets and development cycles are very similar, pricing becomes a great differentiator. Add to that the very fast workflows that Captivate and Adobe on the whole offer, and you start having  a lot less competition making the finalist list.

This is not to say that Adobe is a perfect company and that all quality issues have been resolved. They haven't and there is always room for improvement. But it does make Adobe an impressive force to be reckoned with and if the competition cannot prove the case that their software is worth 4-6 times as much, then time will tell whether those companies can survive. One thing is for sure, cost-cutting and more rapid development techniques and attention to quality will force all vendors to become better comeptitors in order to survive.

Adobe has lowered their prices and has committed to ex cellence. The key in their future will be whether they can continue earnestly with their commitment and be nimble as the smaller companies in their development. Time will tell...

What I do like about the current marketplace is that the poor economy has forced a game-changing action to have occurred and that means greater competition, more innovation and better pricing for all of us, the customers.

If there's any prediction to be made is that Apple leads with innovative strategies that affect everyone, Adobe is the next largest vendor (Microsoft is larger but in a different space) starts leading instead of reacting and that we all benefit from more robust tools at better pricing.

I'll keep my fingers crossed...

6 comments:

  1. At the moment I think there are two "Adobes". The one which made a big step forward with the Creative Cloud. A product with a really fair price and a lot of exciting tools.
    The other "Adobe" which nearly doubles the upgrade price for Captivate 6 (a nice but not revolutionary upgrade). Strategy to see what's the better way?

    ReplyDelete
    Replies
    1. Yes, as with most companies, there are different groups with different prices and releases. Not much is "revolutionary" in eLearning nowadays. I think Captivate 6 is a step in the right direction. I think the pricing for Captivate 6 at $19.99 is pretty decent and worth it since updates/upgrades are included.

      Delete
    2. Well, Rick, if you live in the US $19.99 is ok, in Europa we are talking about $ 32 for Captivate plus $ 76 for the Creative Cloud. Sometimes it's not an advantage to live in Europe ;-)

      Delete
    3. That's true... And most of that extra cost is probably EU taxes!!! Time for change over there... And here too. ;)

      Delete
  2. Great article Rick!

    I agree with your observation about the economy and recent innovation.

    Not all software is free, but with careful choices, software provides excellent ROI.

    These days it feels like the wild west with all the new vendors, technologies and devices.

    The good news, though: The last time I remember this much innovation was the .com boom. Here's hoping that eLearning, mobile, webcasting (like your webcast) and eBooks continue to converge and provide opportunity!

    -Matt
    @mattrsullivan

    ReplyDelete
    Replies
    1. Thanks, Matt!

      You're right, it is like the Wild West and the .com boom is somewhat reminiscent of what we're seeing now.

      I used to think niche markets like eLearning should charge more for the software because they had a limited customer base. But the reality is that the price of much software doesn't come close to warranting the ROI or results desired.

      Convergence of media is so cool right now and iPads, among others, are changing the way we work and think... Not a bad time for consumers! :)

      Delete