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What Next For Adobe As Share Value Slides 26%?

Adobe shares have started to freefall with the stock down 26% as investor question how the Company is going to boost sales going forward especially in the enterprise online retail and intelligence market.

The Company that dominates in the Creative tools market with products such as PDF, Illustrator, In Design and Photoshop was recently exposed by ChannelNews when they cut off access to one of their software offerings and then asked users to pay a new monthly fee to get access to the software.

When they did, they were signed up for a new Adobe Creative Suite licence.

See story here.

After jumping almost 20-fold since early 2012, Adobe stock is falling and fast with analysts now cutting the target price for the US based Company.

The stock has dropped almost 26% since hitting a record high in November 2021.

“There are now questions around Adobe for the first time in a really long time,” Wells Fargo & Co. analyst Michael Turrin told Bloomberg.

Adobe’s bid to sell its signature digital design products to customers such as small business and social media influencers is running into competition from upstarts like Canva the Australian Company with many businesses in Australia preferring the cheaper suite of Creative tools over the expensive Adobe suite.

Canva which was early to recognize a market of nonprofessional’s that wanted content creation tools.

The Australian business surged to a $55 billion valuation, making it one of the world’s most valuable private companies.

In a sign of the competitive pressure, Adobe priced its Express tool at US$9.99 per month, less than the US$12.99 that Canva charges, per its website.

Fireworks a product Adobe acquired from Macromedia was one such simple but efficient creative tool.

4Square Media used the product every day until Adobe decided last year to cut us off and then ask for an additional fee.

In the past, Adobe has been panned by users because of the high cost of Photoshop and other products in its Creative Suite, but most customers pay the price because they have a monopoly on professional creative tools, this alone raises questions for regulators in Australia.

I am in Denver USA at the moment, it’s here that a product called Quark was developed.

This suite of publishing tools, held up to 90% of the desktop publishing market.

It was bought down when Fred Ebrahimi the stubborn CEO and owner of the software, refused to integrate PDF access into his suite of Quark tools.

At the time publishers were going digital and were using PDF to create direct to plate files.

Adobe had PageMaker as their desktop publishing product, it was a clumsy dog of a product that despite a UNIX rewrite for the professional market struggled.

It was not until Adobe rewrote and launched InDesign that they were able to get traction.

It took Australian Graham Freeman the CEO of Adobe Australia to come up with the notion of bundling Adobe software into one package.

Initially tested in Australia the bundle which consisted of PageMaker, Illustrator and Photoshop was a success and laid the ground for the roll out of Creative suite as we know it today.

Canva surged to a $40 billion valuation, making it one of the world’s most valuable private companies. In a sign of the competitive pressure, Adobe priced its Express tool at $9.99 per month, less than the $12.99 that Canva charges, per its website. Both companies also offer a free version of the software.

The software maker has been a top performer for years in the Creative market, now as they chase new market share, they are facing tough competition especially in the online enterprise and retail trading markets where companies such as Salesforce.com and Twilio are outperforming Adobe.

This is a problem as Chief Executive Officer Shantanu Narayen who is counting on the division to drive Adobe’s quest to reach $20 billion in annual revenue and beyond.

The company estimates the market to be worth as much as $110 billion, compared with a potential $63 billion for design tools.

But analysts suggest the uneven economy and shifting customer priorities may stall growth.

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