Why Did Adobe Change Their Business Plan for Photoshop? My Theory

Wagon Detail with Wheel; Death Valley, California

Adobe's Photoshop is an amazing program.  It allows me to do more with my images than I ever need to do. There are so many features in the program that, as a photographer, I'm guessing I only use 15% of them. Additionally, there are a variety of ways to accomplish the each thing in Photoshop, that we, as photographers, can pick and choose the way we want to accomplish something in a manner that best suits us individually.

I was out for my daily walk the other day and was thinking about why Adobe changed their business plan in how they sell, now lease, Photoshop and the other Creative Cloud programs.  Here is the conclusion that I have drawn.  Take it with a grain of salt as it may be full of water, but it makes sense to me.

Photoshop 1.0 was released for sale on February 19, 1990, according to Wikipedia.  Photoshop CS6, and I suspect also Photoshop CC, are considered version 13 but it may be version 14.  Since the first release many, many features have been added, serving the graphics as well as the photographic communities.

When Photoshop was first marketed, it was the dawn of digital photography.  At the time, there were not a lot of digital photographers out there and most were experimenting with this new technology.  Adobe provided some basic features in the program which allowed graphic artists and photographers to create, change and do things to their file/images that assisted them in being creative. They were thrilled, as they should have been. As camera manufacturers created more and better digital cameras, more and more photographers started going digital.  The market for a good digital photography editing program was growing rapidly.

At this point we had parallel lines of growth.  More graphics artists going digital.  More photographers going digital and the greater need for all of these new digital artists to have needed tools in the form of a sophisticated editing program.  Everything was increasing exponentially.

As each subsequent version of Photoshop was released, Adobe added more and better features.  For example, "layers" was one of the first "amazing" features added in my book. I believe it was added to version 3.  Adobe kept thrilling their customers with great features, everyone got really excited and lots of upgrades were sold as well as attracting more and more first time users.  Big gains in growth all around.

(From this point, I'll only speak about the photographic editing capabilities and not address the graphic arts and 3D capabilities as I don't use those features.)

As Photoshop continued to be developed and new versions marketed, Adobe added a few more "amazing" features with each release.  Since more and more photographers were using digital cameras, they were anxious to use these new features and purchased the new versions as they were released, either as upgrades or first time users.  Each subsequent release allowed us to better tweak our images and we continued to be amazed and grateful to Adobe for their hard work, foresight and efforts in providing a product that added a lot of value to digital photography and made digital photography an amazing craft. This pattern continued and and sales were good and grew according to predictions.

I suspect a few years ago, Adobe realized a trend.  I think they saw that continued robust sales would flounder in the future because, with so many great features already in Photoshop, not as many photographers were purchasing the upgrades.  Additionally, since sales of digital SLRs were already starting to slow and now wane, the handwriting was on the wall that Adobe's prime audience for Photoshop, the owner and user of digital SLRs, declining.  The photographic camera market had become saturated.  Younger, newer digital photographers were using their mobile phones, for the most part, to make images and wouldn't be the market for purchasing Photoshop.  Camera sales started slowing which meant Photoshop sales would slow. Many users of Photoshop in the near past thought that they had everything they needed to accomplish their image editing.  I think Adobe understood a few years ago that more and more photographers were really happy with current features and were going to be less and less interested in more and more features in the future.

How many sophisticated features does the average photographer need?  Many don't need Content Aware Fill, or Content Aware Scale, 3D, or many of the other sophisticated features found in the software.  The outcome for Adobe of photographers not really needing more sophisticated features would be that sales would drop. Photographers didn't need anymore than the tons of features already included in the software version they already owned.  Fewer upgrades would be purchased.  Cash flow would dwindle.  You can't run a successful company with your cash flow on the wane.

We're still on a parallel path here.  The photographic market is saturated with individuals using digital cameras but the prime digital photographer that would be interested in Photoshop has slowed.  Adobe responded to the demand for amazing features, but now the need for need features has also slowed.

What to do?  Don't sell Photoshop, but lease it!  Brilliant! By doing that, photographers would be pretty much forced to enter the leasing program and paying a monthly fee to use Photoshop.  Wait a minute?  If they were already happy with their older version, why would they lease Photoshop CC?  Ahhh, grasshopper, because part of Adobe's business plan was to not update Camera Raw (or Lightroom Develop Module) to read the raw files of newer cameras.  We know how much all of us likes the latest and greatest cameras, so, if you ever thought of buying a new camera and you were a raw shooter, then you would either have to find a convoluted way to demosaic your raw files for editing using another program then bringing a TIFF into Camera Raw, or subscribe to Adobe Photoshop CC in order to work on those great files from your new digital camera.  Again, brilliant!  The plan wouldn't have worked if Adobe had taken the initial position of going back and updating Camera Raw in older versions of Photoshop so you could buy your nice new camera but use it with the old version of Camera Raw. Adobe isn't dumb.  They know people love buying gear and never intended to allow you to process your new raw files in the old Camera Raw.  So, tacitly and knowing there would be complaints (but they are the only "real" game in town), they knew that would force you to upgrade.  Again, brilliant business move. Its called cash flow in the business world.

This new business model of forcing you to subscribe to the Creative Cloud keeps the monthly cash flow coming indefinitely!

Can you go to another editing program?  For some of us, yes.  For others, no.  There isn't another universally available program that I am aware of that has the features, reputation and support that Photoshop has.  They are the 800 lb. gorilla and they know it.  Shoot only JPEG?  Maybe, but JPEG isn't there yet for professionals.  Have someone make a third party plug-in that provides the demosaicing algorithms for new cameras?  Maybe, but it is a lot of sophisticated work and I'm not sure the market is there for just a plug-in.

Is there anything wrong with Adobe's new business model?  No, there isn't.  It is good business.  Bad business is when your market is getting smaller and smaller and you do nothing about it to find another form of cash flow.

This theory may be wrong, but it makes sense to me.  The same can be said about digital cameras.  You already see the year to year sales of digital cameras falling fast.  That is because people have digital cameras that now exceed not only their capabilities as photographers, but also exceed their image quality expectations. Why buy I new camera when the old camera does everything and more of what I need?

That begs the question of what will the camera manufacturers do to keep the cash flow coming?  We know what Adobe did, but that is not an option for cameras.  It will be interesting to watch both companies.

Thanks for looking.  Enjoy!

Dennis Mook

Many of my images can be found at www.dennismook.com.  Please pay it a visit.  I add new images regularly.  Thank you.


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