NEW YORK – Earlier this year, Adobe (NASDAQ:ADBE) announced that it was ending ‘perpetual license’ sales of its Creative Suite software in favor of a cloud subscription model called Creative Cloud. With the move Creative Suites 6 would mark the final generation of the company’s popular graphic arts suite as also new releases would only be open to cloud subscribers.
At the time the news provoked an outcry from the creative community; however, the company’s third quarter results appear to show significant interest in the cloud solution and the company announced that more than 1 million users have migrated to Creative Cloud. According to reports, the company is adding more than 20,000 subscribers per week, compared to 8,000 per week only a couple of months ago. That represents twofold growth new subscribers per week in less than a quarter.
While the growth is impressive, it is almost impossible to know how many Creative Suite users there are worldwide as some firms use older versions or pirated copies. The company claimed in 2010 (the software suite’s 20th anniversary) that Photoshop alone had more than 10 million users.
Furthermore, customer fears over the move to the cloud persist; these include tying subscribers to ever-higher subscription fees, service outages and creating a virtual monopoly.
The subscription model has worked well for movies (Netflix – NASDAQ:NFLX) and music (Apple – NASDAQ:AAPL); however, it is too early to see how it will work for software. For example, Microsoft (NASDAQ:MSFT) has had some success with its cloud solution, Office 365, which analysts expect to generate more than $ 1 billion in revenue, while impressive that is slightly more than 1 percent of the company’s sales.
At this point, the jury is still out on ‘cloud centric’ software suites. Even though the internet has become ubiquitous, there are still times when users cannot connect but need to get work done (long-haul flights, for example). Until we reach the point that we are connected everywhere all of the time, hosting primary application on the users system will be required.
Shares of Adobe opened at $ 51.42 on Wednesday.