Adobe's operating income fell from $1.18B to $423M. On purpose.
In 2013 Adobe went subscription-only. Operating income fell from $1.18B to $423M. A year later subscription revenue passed product revenue. The lesson: size the dip before you change how you charge.
Transcript
Adobe's operating income fell from $1.18 billion to $423 million in a single year. On purpose.
In May 2013, Adobe stopped selling software you could own. Creative Suite became Creative Cloud: subscription only.
This is what a pricing-model change looks like from the inside. Product revenue fell from $3.34 billion to $2.47 billion, because a subscription is booked month by month, not at the sale.
A year later, subscription revenue of $2.08 billion passed product revenue of $1.63 billion, and total revenue was back to $4.15 billion.
Adobe could afford the dip because its customers had nowhere better to go. Before you change how you charge, size the dip, and know whether you can survive it.
The records behind this video
Every figure in the video comes from these Decision Records, each with its sources.
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