+8%

4,899 $m

Technology

Adobe announced at its 2013 MAX Conference in May that it will no longer release new versions of its boxed Creative Suite desktop software and will only sell its products and services as a cloud-based online subscription. This bold move garnered a multitude of headlines and forum discussions. For consumers, this means faster product updates and releases; and for Adobe, the ability to combat piracy, a longstanding issue. Now it will require a software check with Adobe to ensure the subscription has been paid, ultimately making it more difficult to pirate its products. Adobe’s shift is reflective of its commitment and focus to delivering end-to-end solutions for creating, publishing, marketing, and optimizing content. It’s been acquiring companies like TypeKit, PhoneGap, and most notably, the Behance portfolio website to expand its capabilities. Understanding the constant evolution of digital experiences and today’s consumers who are increasingly mobile, Adobe is evolving and changing the process for content creators and marketers alike, creating what Adobe calls the “creative graph” and winning kudos for its humorous campaign debunking marketing myths. It’s an end-to-end work environment with all the tools customers need to create and optimize digital content, allowing sharing and collaborating with others. While time will tell how customers will adapt—and Adobe will need to continue innovating and showcasing its end value to users, the future looks bright with early adoption of Creative Cloud already exceeding expectations.

Adobe Systems, Inc.

Type	Public
Traded as	NASDAQ: ADBE NASDAQ-100 Component S&P 500 Component
Industry	Computer software
Founded	Mountain View, California, U.S. (1982)
Founder(s)	Charles Geschke John Warnock
Headquarters	Adobe Systems complex, San Jose, California, U.S.
Area served	Worldwide
Key people	Charles Geschke (Co-Chairman) John Warnock (Co-Chairman) Shantanu Narayen (President & CEO)
Products	List of Adobe products
Revenue	US$ 4.40 billion (2012)[1]
Operating income	US$ 1.18 billion (2012)[1]
Net income	US$ 832 million (2012)[1]
Total assets	US$ 9.97 billion (2012)[1]
Total equity	US$ 6.66 billion (2012)[1]
Employees	11,144 (2012)[1]
Website	Adobe.com

Adobe Systems, Inc. (/əˈdoʊbiː/ ə-doh-bee), is an American multinational computer software company headquartered in San Jose, California, United States. The company has historically focused upon the creation of multimedia and creativity software products, with a more-recent foray towards rich Internet application software development.

Adobe was founded in December 1982^[2] by John Warnock and Charles Geschke, who established the company after leaving Xerox PARC in order to develop and sell the PostScript page description language. In 1985, Apple Computer licensed PostScript for use in itsLaserWriter printers, which helped spark the desktop publishing revolution. The company name Adobe comes from Adobe Creek in Los Altos, California, which ran behind the houses of both of the company’s founders.^[2] Adobe acquired its former competitor, Macromedia, in December 2005, which added newer software products and platforms such as ColdFusion, Dreamweaver, Flash and Flex to its product portfolio.

As of 2010, Adobe Systems has 9,117 employees,^[2] about 40% of whom work in San Jose. Adobe also has major development operations in Waltham, Massachusetts; Orlando, Florida; Minneapolis, Minnesota; Lehi, Utah; Seattle, Washington; San Franciscoand San Luis Obispo, California in the United States; Ottawa, Canada; Hamburg, Germany; Noida and Bangalore, India; Bucharest, Romania; Basel, Switzerland; and Beijing, China.

History[edit]

Adobe’s corporate logo, featuring the stylized “A”, was designed by Marva Warnock, wife of John Warnock, who is also a graphic designer.^[3]

Adobe’s first products after PostScript were digital fonts, which they released in a proprietary format called Type 1. Applesubsequently developed a competing standard, TrueType, which provided full scalability and precise control of the pixelpattern created by the font’s outlines, and licensed it to Microsoft. Adobe responded by publishing the Type 1 specification and releasing Adobe Type Manager, software that allowed WYSIWYG scaling of Type 1 fonts on screen, like TrueType, although without the precise pixel-level control. But these moves were too late to stop the rise of TrueType. Although Type 1 remained the standard in the graphics/publishing market, TrueType became the standard for business and the average Windows user. In 1996, Adobe and Microsoft announced the OpenType font format, and in 2003 Adobe completed converting its Type 1 font library to OpenType.

In the mid-1980s, Adobe entered the consumer software market with Adobe Illustrator, a vector-based drawing program for the Apple Macintosh. Illustrator, which grew from the firm’s in-house font-development software, helped popularize PostScript-enabled laser printers. Unlike MacDraw, the then standard Macintosh vector drawing program, Illustrator described shapes with more flexible Bézier curves, providing unprecedented accuracy. Font rendering in Illustrator, however, was left to the Macintosh’s QuickDraw libraries and would not be superseded by a PostScript-like approach until Adobe released Adobe Type Manager.

In 1989, Adobe introduced what was to become its flagship product, a graphics editing program for the Macintosh called Photoshop. Stable and full-featured, Photoshop 1.0 was ably marketed by Adobe and soon dominated the market.^[4]

In 1993, Adobe introduced PDF, the Portable Document Format, and its Adobe Acrobat and Reader software. PDF is now an International Standard: ISO 32000-1:2008. The technology is adopted worldwide as a common medium for electronic documents.

Arguably, one of Adobe’s few missteps on the Macintosh platform was their failure to develop their own desktop publishing (DTP) program. Instead, Aldus with PageMaker in 1985 and Quark with QuarkXPress in 1987 gained early leads in the DTP market. Adobe was also slow to address the emerging Windows DTP market. However, Adobe made great strides in that market with the release of InDesign and its bundled Creative Suite offering. In a failure to predict the direction of computing, Adobe released a complete version of Illustrator for Steve Jobs‘ ill-fated NeXT system, but a poorly produced version for Windows.

Despite these missteps, licensing fees from the PostScript interpreter allowed Adobe to outlast or acquire many of its rivals in the late 1980s and early 1990s. In December 1991, Adobe released Adobe Premiere, which Adobe rebranded to Adobe Premiere Pro in 2003. In 1994, Adobe acquired Aldus and added Adobe PageMaker and Adobe After Effects to its product line later in the year; it also controls the TIFF file format. In 1995, Adobe added Adobe FrameMaker, the long-document DTP application, to its product line after Adobe acquired Frame Technology Corp. In 1996, Adobe Systems Inc added Ares Software Corp.^[5] In 1999, Adobe introduced Adobe InCopy as a direct competitor to QuarkCopyDesk.^[6]

Products[edit]

Desktop software

Adobe Photoshop, Adobe InDesign, Adobe Illustrator, Adobe Fireworks, Adobe Soundbooth, Adobe Acrobat and Adobe Audition

Server software

Adobe ColdFusion, Adobe Content Server and Adobe LiveCycle Enterprise Suite, Adobe BlazeDS

Formats

Portable Document Format (PDF), PDF’s predecessor PostScript, ActionScript, Shockwave Flash (SWF) and Flash Video (FLV)

Web-hosted services

Adobe Kuler, Photoshop Express, and Acrobat.com

Web design programs

Adobe Dreamweaver, Adobe Contribute, Adobe Muse, Adobe Flash Builder, Adobe Flash Catalyst, Adobe Flash, and Adobe Edge

Video editing and visual effects

Adobe Premiere Pro, Adobe After Effects, Adobe Prelude, and Adobe SpeedGrade

eLearning software

Adobe Captivate

Organizational software

Adobe Extension Manager and Adobe After Effects

Web content management Software

Adobe Web Experience Management (WEM)

Awards[edit]

Since 1995, Fortune has ranked Adobe as an outstanding place to work. Adobe was rated the fifth-best U.S. company to work for in 2003, sixth in 2004, 31st in 2007, 40th in 2008, and eleventh in 2009.^[7] In May 2008, Adobe Systems India was ranked 19th of great places to work in India.^[8] In October 2008, Adobe Systems Canada Inc. was named one of “Canada’s Top 100 Employers” by Mediacorp Canada Inc., and was featured in Maclean’s newsmagazine.^[9]

Criticism[edit]

Pricing[edit]

Adobe has been criticized for its pricing practices,^[10][11] with retail prices being as much as twice as high in non-US countries as in the US.^[12] As pointed out by many, it is significantly cheaper to pay for a return airfare ticket to the United States and purchase one particular collection of Adobe’s software there than to buy it locally in Australia.^[13][14]

After Adobe revealed the pricing for the Creative Suite 3 Master Collection, which was £1,000 higher for European customers,^[15] a petition to protest over “unfair pricing” was published and signed by 10,000 users.^[16] In June 2009, Adobe further increased its prices in the UK by 10% in spite of weakening of the pound against the dollar,^[17] and UK users are not allowed to buy from the US store.^[18]

In 2011, after the company announced that it will only allow owners of the most recent versions of Creative Suite to upgrade to new versions, Scott Kelby, The President of TheNational Association of Photoshop Professionals, wrote an open letter to Adobe requesting it re-thinks its product upgrade policy.^[19][20]

Customer service[edit]

The company has been criticized by users for bad customer service.^[21] In August 2009 Adobe apologized on their main support web page for poor customer service.^[22][23]

Security[edit]

For years hackers have exploited vulnerabilities in Adobe programs, such as Adobe Reader, to gain unauthorized access to computers.^[24] Adobe’s Flash Player has also been criticized for, among other things, suffering from performance, memory usage and security problems (see criticism of Flash Player). A report by security researchers fromKaspersky Lab criticized Adobe for producing the products having top 10 security vulnerabilities.^[25]

Observers noted that Adobe was spying on its customers by including spyware in the Creative Suite 3 software and quietly sending user data to a firm named Omniture.^[26] When users became aware, Adobe explained what the suspicious software did and admitted that they “could and should do a better job taking security concerns into account”.^[27] When a security flaw was later discovered in Photoshop CS5, Adobe sparked outrage by saying it would leave the flaw unpatched, so anyone who wanted to use the software securely would have to pay for an upgrade.^[28] Following a fierce backlash Adobe decided to provide the software patch.^[29]

Criticism of Creative Cloud[edit]

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Adobe has caused concerns within the photography and filmmaking community, especially long term users.^[30][31] In May 2013, Adobe Systems announced plans to end perpetual software licensing for its Creative Suite products in favor of a subscription-based service model called Creative Cloud, which had been introduced as an alternative licensing model in May 2012.

Shifting to a software as a service model, Adobe announced more frequent feature updates to its products and the eschewing of their traditional release cycles.^[32] Customers must pay a monthly subscription fee and if they stop paying, they will lose access to the software as well as to the work they saved in proprietary file format,^[33] which is not backward-compatible with the Creative Suite^[34][35] (Adobe admitted that this is a valid concern^[36]). In addition, they will not be able to retrieve their files from the cloud once the subscription has expired.^[37] They must have Internet connection^[38] to download the software and to use the 2GB of provided storage space (or the additionally purchased 20GB^[39]), and must validate the license monthly.^[40]

Although investors applauded the move, the reaction across segments of Adobe’s user base was swift and apocalyptic.^[41] This shift has been met with mixed reviews by both corporations and independent designers, with many people expressing their displeasure on the web^[42][43][44] and through multiple internet petitions^[45] calling upon Adobe to continue selling creative software under the perpetual licensing model.^[46] Among these was a Change.org petition which reached over 30,000 signatures within a few weeks of the announcement.^[47]

According to the critics, the move to a perpetual rental scheme was highly disruptive to many users,^[48] and caused an unprecedented loss of trust in Adobe as a company and an attendant rise in anxiety among their customers.^[49][50] Users noted that they not always wanted to, or could afford to upgrade to the newest versions of the software, and the new licensing was essentially forcing them to do this.^[51] College officials expressed their concern with the new licensing terms, worried about rising costs and have asked about switching to alternative products.^[52]

Adobe VP of Creative Solutions responded that they “expected a higher degree of this type of reaction from the hobbyist photographic community”.^[53] Despite a storm of customer criticism over Adobe’s move to subscription-only pricing,^[54] the company announced that it would not sell perpetual licenses to its software alongside the subscriptions – “We understand this is a big change, but we are so focused on the vision we shared for Creative Cloud, and we plan to focus all our new innovation on the Creative Cloud”.^[55]

Digital Photography Review wrote that the new license scheme increased fear, uncertainty, doubt, expense and risk. The website suggested that serious photographers reestablish a trusted and “Good Photography Workflow” without monthly payments for the next 10 years.^[56] Online articles began offering examples of replacements of Photoshop,^[57][58]Illustrator, and other programs,^[59][60][61] with competing products such as CorelDRAW,^[62] PaintShop Pro,^[63] and Pixelmator^[64] directly offering alternatives, and launching promotions for Adobe customers.^[65] David Hobby, the author of Strobist.com, tweeted: “I like Photoshop; I still use CS3. But I am *not* renting PS for $600/yr. Period. Big winner:Capture One, which now needs a LR clone.”^[66]

Adobe, however, claimed that Creative Cloud is its “highest customer satisfaction product in the creative space” and that even prior to Adobe’s move to a pure subscription model, “more than 80 percent of customers who bought products from Adobe’s Web site picked CC over CS.” ^[67]

Creative Cloud has been criticized for broken file syncing, one of its core features.^[68][69] In May 2013 Adobe announced that it was suspending the file-sync desktop preview “for the next couple of weeks”.^[68] Reviewers of Creative Cloud were disappointed with the functionality of the cloud storage^[70][71][72] and were “far from convinced by Adobe’s subscription model”.^[73] Users were concerned that they would be forced to upgrade their computer hardware when it is no longer supported by the current version of the Creative Cloud software.^[74]

Although Creative Cloud was expected to end the piracy of Photoshop,^[75] which is one of the most pirated pieces of software,^[76] Creative Cloud was hacked and its applications made illegally available a day after it officially launched.^[77][78] However, Adobe claims that Creative Cloud will be more accessible and provide better value – “We believe in fighting piracy of software by making the right software for the right people at the right price”.^[79]

The service has been criticized for its price, which is higher in Europe than in the US and according to Adobe is based on “customer research that assesses the value of the product in the local market”.^[80] Critics noted that Adobe lists 29 supported currencies, whereas boxed versions could be installed in any of the world’s 249 territories without issue.^[81] Current users of Creative Suite 3 and higher get discounts for the Creative Cloud service for a limited time, after which the subscription cost increases.^[40]

Creative Cloud has also been criticized for its Terms of Use, a license agreement that according to the critics raises issues with privacy, predictability and fairness for the customer.^[82][83][84] Users worried about the security implications of putting their assets to the cloud.^[85]

Security breach[edit]

On October 3, 2013, the company revealed that 2.9 million customers’ sensitive and personal data was stolen in security breach which included encrypted credit card information.^[86][87][88] Likely not all personal information was encrypted, such as email addresses and physical addresses, though data privacy laws in 44 states require this information to be encrypted.^[89][90] Many of the credit cards were tied to the Creative Cloud software-by-subscription service.^[91]

Adobe offered its affected US customers a free membership in a credit monitoring service, but no similar arrangements have been made for non-US customers.^[92][93] – When a data breach occurs in the US, penalties depend on the state where the victim resides, not where the company is based.^[94]

After stealing the customers data, cyber-thieves also accessed Adobe’s source code repository, likely in mid-August 2013.^[95] Because hackers acquired copies of the source code of Adobe proprietary products,^[96][97] they could find and exploit any potential weaknesses in its security, computer experts warned.^[98]

According to Hold Security, a firm which discovered 40GB of Adobe’s source code^[99] on a server of a Russian-speaking hacker group,^[100] the “disclosure of encryption algorithms, other security schemes, and software vulnerabilities can be used to bypass protections for individual and corporate data” and may have opened the gateway to new generation zero-day attacks.^[101] A security researcher characterized this Adobe breach, which affected Acrobat, ColdFusion and numerous other applications, as “one of the worst in US history”.^[102]

Corporate affairs[edit]

Leadership[edit]

Executive Board[103]
Charles Geschke	Co-Chairman
John Warnock	Co-Chairman
Shantanu Narayen	President & Chief executive officer
Karen Cottle	Senior Vice President, General Counsel, and Corporate Secretary
Mark Garrett	Executive Vice President and Chief Financial Officer
Donna Morris	Senior Vice President, Human Resources
Kevin Lynch	Senior Vice President: Experience & Technology Group, Chief Technology Officer

Company events[edit]

In 1992, Adobe acquired OCR Systems, Inc.; in 1994, the company acquired Aldus Corporation. On May 30, 1997, Adobe reincorporated in Delaware by merging with and into Adobe Systems (Delaware), which had incorporated on May 9, 1997. Adobe Systems Incorporated (Delaware), the surviving corporation, changed its name to Adobe Systems Incorporated concurrently with the merger.^[104]

The company acquired GoLive Systems, Inc. and released Adobe GoLive in 1999 and began shipping Adobe InDesign as a direct competitor to QuarkXPress and as an eventual replacement for PageMaker. In May 2003, Adobe acquired Syntrillium Software, adding Adobe Audition to its product line. In December 2004, French company OKYZ S.A., makers of 3D collaboration software, was acquired. This acquisition added 3D technology and expertise to the Adobe Intelligent Document Platform.

On December 12, 2005 Adobe acquired its main rival Macromedia in a stock swap valued at about $3.4 billion, adding Adobe ColdFusion, Adobe Contribute, Adobe Captivate,Adobe Acrobat Connect (formerly Macromedia Breeze), Adobe Director, Adobe Dreamweaver, Adobe Fireworks, Adobe Flash, FlashPaper, Adobe Flex, Macromedia FreeHand,Macromedia HomeSite, Macromedia JRun, Adobe Presenter, and Macromedia Authorware to Adobe’s product line.^{[105][106][107]}

In January 2007, Adobe Photoshop Lightroom was released to assist photographers in managing digital images and post production work. Adobe acquired Scene7 in May of the same year. The company makes an image processing and display platform used in many retail sites on the web. In July, Adobe released Soundbooth. This product was not intended to replace the existing Adobe Audition but merely to provide an environment for professionals not specializing in audio. On August 3, 2007, the company announced their plans to discontinue development of Authorware, the “visual authoring tool for creating rich-media e-learning applications for delivery on corporate networks, CD/DVD, and the Web.”^[108] Authorware was one of the development tools acquired in the Macromedia/Adobe merger. It was replaced by Adobe Captivate. In October, the company acquired Virtual Ubiquity, along with its online word processor, Buzzword.

On November 12, 2007, CEO, Bruce Chizen resigned. Effective December 1, he was replaced by Shantanu Narayen, Adobe’s current president and Chief Operating Officer. Bruce Chizen served out his term on Adobe’s Board of Directors, and then continued in a strategic advisory role until the end of Adobe’s 2008 fiscal year.

Adobe released Adobe Media Player in April 2008. On April 27, Adobe discontinued development and sales of its older HTML/web development software, GoLive in favor ofDreamweaver. Adobe offered a discount on Dreamweaver for GoLive users and supports those who still use GoLive with online tutorials and migration assistance. On June 1, Adobe launched Acrobat.com, a series of web applications geared for collaborative work.^[109] Creative Suite 4, which includes Design, Web, Production Premium and Master Collection came out in October 2008 in six configurations at prices from about USD $1,700 to $2,500^[110] or by individual application.^[111] The Windows version of Photoshop includes 64-bit processing.^[111] On December 3, 2008, Adobe laid off 600 of its employees (8% of the worldwide staff) citing the weak economic environment.

Adobe announced two acquisitions in 2009: on August 29, it purchased Business Catalyst,^[112] and on September 15, it bought Omniture.^[113] On November 10, the company laid off 680 employees.^[114] Adobe announced it was investigating a “coordinated attack” against corporate network systems in China, managed by the company.^[115] This same attack was also brought against Google and over 20 other companies. Adobe announced the new Creative Suite series (CS5) launched globally Monday, April 12, 2010. New software such as Flash Catalyst and Business Catalyst were also announced.

Adobe’s 2010 was marked by continuing front-and-back arguments with Apple over the latter’s non-support for Adobe Flash on its iPhone, iPad and other products.^[116] Apple CEO Steve Jobs claimed that Flash was not reliable or secure enough, while Adobe executives have argued that Apple wish to maintain control over the iOS platform. In April 2010, Steve Jobs published a post titled “Thoughts on Flash” where he outlined his thoughts on Adobe Flash and the rise of HTML 5.^[117] In July 2010, Adobe bought Day Software^[118]integrating their line of CQ Products: WCM,^[119] DAM,^[120] SOCO,^[121] and Mobile^[122] and bringing along Chief Scientist Roy Fielding principal author of HTTP and co-founder of theApache software foundation.

In January 2011, Adobe acquired Demdex, Inc with the intent of adding Demdex’s audience-optimization software to its online marketing suite.^[123]

At PhotoShop World 2011, Adobe unveiled a new mobile photo service.^[124] Carousel is a new application for iPhone, iPad and Mac that uses Photoshop Lightroom technology for users to adjust and fine-tune images on all platforms.^[124] Carousel will also allow users to automatically sync, share and browse photos.^[124] The service was later renamed to “Adobe Revel”.^[125]

On November 9, 2011 Adobe announced that they would cease development of Flash for mobile devices following version 11.1. Instead they will be focusing on HTML 5 for mobile devices.^[126]

On December 1, 2011, Adobe announced that it has entered into a definitive agreement to acquire privately held Efficient Frontier.^[127][128]

In December 2012, Adobe opened a new 280,000 square foot corporate campus in Lehi, UT.^[129]

Financial information[edit]

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Adobe Systems entered NASDAQ in 1986. Adobe’s 2006 revenues were US$2.575 billion.^[130]

As of February 2007, Adobe’s market capitalization was roughly US$23 billion; as of August 2007, its shares were trading on the NASDAQ for around $40, with a P/E ratio of about 49 and EPS of about $0.82.^[130]

As of March 2008, Adobe’s market capitalization was roughly $18 billion; its shares were trading on the NASDAQ for around $33, with a P/E ratio of about 27 and EPS of about $1.21.^[130]

As of April 2011, Adobe’s market capitalization was roughly $17 billion; its shares were trading on the NASDAQ for around $33, with a P/E ratio of about 19.73 and EPS of about $1.70.

2010s Fiscal year Revenue 2012 $4.404 billion[131] 2011 $4.216 billion[131] 2010 $3.800 billion[131]

2000s Fiscal year Revenue 2009 $2.946 billion[132] 2008 $3.580 billion[133] 2007 $3.158 billion[134] 2006 $2.575 billion[135] 2005 $1.966 billion[136] 2004 $1.667 billion[137] 2003 $1.295 billion[138] 2002 $1.165 billion[139] 2001 $1.230 billion[140] 2000 $1.266 billion[141]

1990s Fiscal year Revenue 1999 $1.015 billion[142] 1998 $895 million[143] 1997 $912 million[143] 1996 $787 million[143] 1995 $762 million[143] 1994 $100 million[143]

Adobe’s fiscal years run from December to November. For example, the 2007 fiscal year ended on November 30, 2007.

Social responsibility[edit]

Adobe promotes several ongoing social responsibility initiatives, including Adobe Youth Voices and Creativity Scholarships through the Adobe Foundation.^[144][145]

As part of its Lehi, Utah, campus construction, Adobe supported an Artist In Residence program at Thanksgiving Point Institute, in which artist Andrew Smith constructed a kinetic sculpture to be placed in the new Adobe campus building.