\n\nIn April 2005 Adobe announced that it was going to acquire Macromedia. This is actually a bit more recent than I thought. It seems so long ago now. I'd have to say that by 2005 Adobe was no longer quite so universally loved because it had already, for some time, been guilty of:\n
\n\t- treating Mac users (who still accounted for something like half of its revenue) as second-class citizens
\n\t- revving its entire product line and charging for upgrades cyclically (which is now pretty much standard practice among all the big players to the point where Adobe is actually not as bad as, say, Autodesk in this regard)
\n\t- charging for compatibility updates
\n\t- trailing the pack in supporting new OS features
\n\t- producing ridiculously bad installers and updaters
\n\t- writing software that \"phoned home\" and would hang if home wasn't answering
\n\t- implementing bizarre non-standard (on Mac or Windows) user interfaces,
\n\t- and bloating Acrobat to the point where most savvy computer users would avoid it like the plague
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\nSo I think it was no longer true that Adobe was \"almost universally loved and respected\" in 2005. I think there was enough residual love and respect that we all had some hope that the next version of Adobe Acrobat, say, might not suck so badly.\n\nIf you look at Adobe's FAQ concerning the merger you'll see that Flash is mentioned five times in bullet points, Flex (which is really Flash) is mentioned once, and Breeze (also really Flash) another. This is compared to two mentions of Acrobat (both in concert with Flash) and one of most other major products. (Director, notably, was omitted altogether.)\n\nWhy did Adobe acquire Macromedia?
\nTogether, we are building on a shared heritage of redefining the way people and businesses communicate, and the similar vision of enabling the creation and delivery of compelling content and experiences across multiple operating systems, devices, and media. Acquiring Macromedia accelerates Adobe's strategy of delivering an industry-defining technology platform that provides more powerful solutions for engaging people with digital information. This platform meets a broader set of customer needs than either company could address on its own. And, through the enormous reach of Adobe Reader® software and the Macromedia Flash Player, we have access to a larger total addressable market and significant long-term growth opportunities — especially in emerging areas such as mobility, the enterprise, and the web.
\nAdobe's acquisition of Macromedia and its apparent intention to merge the Acrobat and Flash plugins (the link repudiates this and says that Adobe was talking about Apollo, which became AIR) did, however, mark the beginning of the end for many users' love affairs with Adobe. Many of us loved Photoshop, Illustrator, After Effects, and/or InDesign, and liked PDF as a document standard and/or workflow enabler, while tolerating or hating Acrobat itself. By this time Flash had established itself as pretty much the only browser plugin most users would tolerate, mainly because HTML lacked strong animation, audio, and video capabilities.\nThe Dumbest Idea in the World
\nThe purpose of a business is to create a customer.\n\nPeter Drucker
\nI doubt Drucker's bumper sticker comment reflected accurately his thinking on the topic, but saying \"the purpose of a business is to create a customer and make him/her happier\" would be less pithy. It's also the difference between — say — selling someone a smartphone and selling someone a smartphone and providing excellent customer support and free system updates on a regular basis.\n\nI read The Dumbest Idea in the World: Maximizing Shareholder Value this morning and it immediately made me think of Adobe. The nutshell version of the article is that rewarding executives for maximizing shareholder value (rather than running a company well) is analogous to rewarding football coaches for beating the spread (rather than winning games), that it is rotting the core of American capitalism, and that until regulations are changed to reverse it, no amount of \"reform\" will fix things. At the end it cites three examples of companies that have done a terrific job of taking care of shareholders precisely by placing shareholder interests behind those of customers. (The three companies are P&G, J&J, and Apple.)\n\nIt seems to me that Adobe achieved its explosive growth during the late 90s by producing insanely great products for its customers (customers who happened to be central to the dot com boom). The momentum from this carried Adobe through to 2005 (the explosive growth ended, but Adobe still outperformed the market). But sometime in the early 2000s Adobe lost its way and started thinking more about maximizing shareholder value and less about producing great products. It went from thinking about the user benefits of seamless workflow to thinking about the financial benefits of user lock-in. Not coincidentally, John Warnock retired as CEO of Adobe in 2000, and as CTO in 2001. The result is the Adobe of today, which seems not to care — as a company — about product quality, but clearly cares deeply about making more money from its most loyal customers.\nMissing the Forest for the Trees
\nI'm sure that many companies envy Apple's margins and ability to monetize its customers, and one way of interpreting Adobe's latest moves is as a desire to become more Apple-like — i.e. trade market share for profits. But bear in mind that Apple has never sacrificed market share for profits. (Apple has tried and failed to trade profits for market share and failed every time.) Instead it has decided what it wants to offer customers and how to do this at a profit and then executed. It doesn't want to establish one kind of relationship with a customer (\"we're ridiculously cheap for what you get\") and then convert it into another (\"we're a premium brand with lots of after-sales support\").\n\n(This is why you should always ignore pundits who suggest Apple buy market share with its cash hoard (e.g. by selling discounted iPads). Even if it worked, it would entail creating one kind of customer relationship and then converting it into another.)\n\nI'm sure that somewhere Adobe has presentations showing how its new pricing policy will offset the loss of some customers by increasing the revenues from remaining customers. I very much doubt that they expect the new policy will create new customers (other than via churn). What the policy clearly and crudely is intended to do is to make existing customers pay for updates more frequently: clearly Adobe doesn't think of someone using Photoshop CS3 as a customer, but as a \"former\" customer. (As long as I can recall, Adobe has ceased patching bugs in anything less than the latest version of its products. E.g. here's a list of Photoshop (Mac) updates. Photoshop CS3 stops where Photoshop CS4 starts. This is hardly egregious, but some companies do not behave this way.)\nChanging a Happy Marriage into an Abusive Relationship
\nLet's go back to Drucker's bumper sticker: the purpose of a business is creating customers, and — assuming that by \"customer\" he means \"lasting and mutually beneficial relationships with clients\" — how does this map to Adobe vs. Apple or P&G?\n\nApple creates customers who are loyal and highly satisfied on their part, and highly profitable on Apple's part. Apple used to make profits from customers primarily by selling widgets, but now sells or gives away all kinds of add-on services that make customers happy over the life of a product. So Apple has changed its earlier relationship with customers (occasionally sell them a high quality product at a good margin and do a reasonable job of supporting it) to a new business model (sell high quality products at a good margin and continuously sell and give away additional products and services to existing customers) without annoying anyone too much. It's worth noting that the old kind of relationship isn't destroyed by the new kind. Don't want \"apps\" or iTunes content? Fine. Just buy our products when you feel like it.\n\nIn contrast, Adobe has gone from a customer relationship much like Apple's (back in the 90s Adobe would let you upgrade from any version of one of its products to the current one for the same price) to a more and more selfish relationship, where all the changes have been aimed at increasing Adobe's revenues (updating older versions costs more, to make up for your not paying for intervening updates) to the now Autodesk-like subscription model. In the mean-time Adobe has made lots of moves to buy marketshare (Photoshop's market share was created by giving away Photoshop with scanners then selling upgrades) and convert low-margin customers into high-margin customers (buy Elements or Lightroom and eventually upgrade to Photoshop for some vital missing feature).\n\nMicrosoft vs. Adobe vs. Autodesk\n\nIn terms of who its customers are, Autodesk is a lot more like Adobe than Microsoft is\n\n ","$updatedAt":"2024-06-05T09:10:30.268+00:00",path:"love-amp-upgrades",_created:"2024-07-09T20:29:46.961Z",id:"4625",_modified:"2024-07-09T20:29:46.961Z","$id":"4625",_path:"post/path=love-amp-upgrades"},"page/path=blog":{path:"blog",css:"",imageUrl:"",prefetch:[{regexp:"^\\/(([\\w\\d]+\\/)*)([\\w-]+)\\/?$",path:"post/path=[3]"}],tags:["public"],source:"",title:"",description:"",_path:"page/path=blog"}}