Monday, April 23, 2012

Adobe is onto something with Creative Cloud

Adobe has started accepting pre-orders for CS6 Creative Cloud, its software subscription program. Everything that's been in Adobe's previous Creative Suites, plus a number of new applications that are either being released from or are still in Adobe Labs beta, and all of Adobe's tablet apps, are included in one monthly subscription. Month-to-month subscriptions are $75/month; annual subscriptions are $49.99/month. Prior purchasers of any version of Creative Suite from 3 or above qualify for a discount on the first-year subscription, which brings the price down to $29.99/month.

There were many complaints when Adobe first announced its plan to move to subscription pricing. The fear was that subscriptions would cost more than purchasing software outright--and in some cases, the fears were well-placed: Upgrading from CS5.5 Master Collection, which is the equivalent of Creative Cloud, costs $525, less than the $600 annual price of Creative Cloud before the first-year discount. However, if you skipped version 5.5 and stayed with version 5, the upgrade price is $1,049.00. Upgrades from earlier versions of Creative Suite are even more expensive.

The $29.99/month discounted first-year subscription price is a powerful incentive for Creative Suite users to switch to Creative Cloud. Adobe hopes that it can convince enough people to switch to Creative Cloud that eventually, it will no longer be economic for people to upgrade their packaged software. There's nothing keeping Adobe from raising prices once they get a critical mass of CS users to switch, of course. However, it looks like Adobe is willing to take a chance that lower prices will result in more total users. In addition, the company may be counting on the psychological benefit of a fairly low monthly payment versus a one-time big purchase to get into or upgrade Creative Suite. A completely new Creative Cloud user will get the equivalent of  $2,599 worth of software for a first-month payment of $50 on the annual plan.

My bet is that Adobe's pricing is going to bring in many more users, and it's going to put additional pressure on Avid, and especially Apple.

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