Adobe’s Strategy

Forbes writes:

Adobe’s traditional business is stuck in neutral. While gross margins still float above 90%, sales have gone flat. Last year the San Jose, Calif. company grossed $1.2 billion, down 5% from the year prior. Net was $191 million, off 7%. Despite all that Adobe’s stock trades at a frothy 35 times 2003 estimated earnings.

Companies that aren’t growing don’t hang on to such high multiples. Adobe Chief Executive Bruce Chizen says his firm can gross $5 billion a year, but to do so he has to stop selling software in batches of 50 to designers and start selling to governments and corporations at 1,000 seats per clip. That means coming up with a product used by every department in a company, familiar to interns, executives and all in between.

Adobe has worked the “everybody is a publisher” pitch before. Ten years ago it introduced Reader, a free program that allowed PC users to view PDF files created in Acrobat. The PDF technology gave anyone the ability to produce nice-looking documents that were easily searchable and navigable and printed exactly as they appeared when opened with Reader. Adobe gave away an astounding 500 million copies of Reader, nearly three times the number of Microsoft Office licenses. Yet it failed to convert that huge base into Acrobat buyers; Adobe has sold just 10 million copies of Acrobat. It was expensive, at $250 per copy, and consumers didn’t know the difference between the free Acrobat Reader and Acrobat, the program that creates PDFs.

Chizen, who has been running the company since December 2000, has learned from past mistakes. He’s spent the last two years redesigning products, replacing sales staff and buying up smaller firms to gird Adobe for a new assault on the corporate market. The grand plan: Convince companies that every single document they produce should be turned into an Adobe PDF.

It used to be that a document created in Acrobat was the only thing that could become a PDF. Now, with Adobe’s new software, a Word memo, an Excel spreadsheet, a Web site, a videoclip or a hybrid combination of all four formats can be converted to a PDF. Adobe has begun selling software that gives any of these documents the ability to be read by Adobe Reader, as well as tell company servers where to send itself, who can read it, who has made changes to it and what data within it should go into which part of the database. “The ubiquity of Reader means we can build more applications to take advantage of that platform,” says Chizen. “It’s like what Microsoft has in Office.”

I don’t know how Adobe will make it happen – OpenOffice has a free PDF writer in-built! And OpenOffice works on both Windows and Linux.


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Rajesh Jain

An Entrepreneur based in Mumbai, India.