Adobe moves to subscription model

Photoshop developer Adobe is moving entirely into the cloud as it tries out a new business model.

Boxes containing software like Photoshop for picture editing or Indesign for layout are a thing of the past. Now customers will rent the programmes from the data cloud. The company will also start selling its own hardware.

That means Creative Suite 6, the current version, will be the last sold in stores.

After that, the plan is to move entirely to a subscription model.

Indeed, a subscription version has been available for more than a year under the name Creative Cloud and has proven popular with customers.

The move firmly puts Adobe on the trend towards cloud computing, by which data and programmes can be downloaded from the internet.

Companies are also finding that cloud computing is becoming a more stable business model.

Until now, companies would see an uptick in business when a new version of software was released, only to see it cool off, the older it got. But, with the subscription model — in this case, 78 dollars per month — sales get spread out more evenly.

Adobe is also offering software for designing websites (Dreamweaver) or for working with videos (Premiere).

But there are risks to such a radical change in a business model.

Subscription income only made up about a fifth of Adobe’s sales of about 1 billion dollars a quarter. At the same time, users of its cloud services increased by 153,000 to 479,000 in the last quarter.

Adobe has warned that there could be high costs in the transition that could reduce profits. The company says it hopes to have 4 million subscription customers by the autumn of 2015.

Part of the transition is the move to making its own hardware.

Those include a networked pen for entering data on touchscreens under the name of Project Mighty as well as a digital ruler with the slightly ironic name Napoleon Ruler.

The company is also shuttering the graphics programme Fireworks.

However, the PDF software programme Acrobat will continue to be sold separately, outside the cloud.