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Harm_Millaard
Harm_Millaard
Inspiring
June 1, 2013
Question

Todd, can you explain, please...

  • June 1, 2013
  • 1 reply
  • 20973 views

Todd,

You are on record stating that one of the key benefits of CC is the flexibility it gives Adobe to make updates available.

Can you explain how owning or renting a license makes any difference at all to update policies? To me it looks like a BS argument, but maybe I'm wrong.

I also fail to see the relevancy how point releases for Acrobat, Flash or Dreamweaver need to be aligned with AE or PR. That is exactly what Adobe did in the past, there were 'regular' but infrequent point releases for DW and FL that had no relevancy to AE or PR. How will that change in the future?

What is the difference between CC7 and CC8, a version upgrade, that depends on the rental license model that can not be achieved with a perpetual license?

I think the argument is somewhat akin to owning a house or renting a house. Home improvements on the exteriror are done by the owner. The difference is when these improvements are carried out. If you rent, you have to wait for the owner to decide when he starts, if you are the owner you can decide yourself and have the option to further improve the necessary changes.

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    1 reply

    SteveHoeg
    Adobe Employee
    SteveHoeg
    Adobe Employee
    June 1, 2013

    I'm not a lawyer or an accountant, but the idea is subscriptions change how we will be able to do feature bearing updates because of revenue recognition laws. The Sarbanes-Oxley Act prevents new functionality from being added to goods for which the revenues have already been recognized. Because of this we have previously been able to do bug updates with fixes for advertised features, but not add new functionality when we have already recorded the sale. Subscriptions change what may be done in updates because the revenue is recurring in the same time period as the update.

    An excellent question is how have other organizations been able to release features without charging for an update? There are a few ways in which this is possible such as deferring revenue by not recording perpetual sales in the period for which free functional updates are given. When a product makes up a tiny fraction of a company's portfolio this may be feasible, but for Adobe the Creative Suite makes up too significant amount for this to be possible.

    We've been listening to the feedback that has been provided on our announcements and will have news around some issues raised shortly. We are really excited for what the Creative Cloud allow us to do and are fully committed to using it to deliver value that we could not do by spending more effort on isolated application sales. We will now be able to release awesome new Premiere Pro features when they are ready instead of waiting for other applications, and accelerate integration between our offerings. Please keep the feedback coming, we appreciate hearing your concerns.

    --Steve Hoeg, Engineering Manager, Adobe Premiere Pro

    B
    Biggles Lamb
    Participating Frequently
    June 1, 2013

    Steve

    As a Premiere user since 4.1 (the old 4.1 Not Premiere Pro 4) I can tell you that from my perspective that there have not been many awesome features in any releases since 4.1 with the exception of (A) 6.5 becoming real time (B) also the addition of sequences (C) Mercury playback.

    I am talking about functionality (edit methods, timelines, playback etc) not Adobe keeping up with the changes from SD to HDV to HD.

    You have also produced some dogs, Premiere Pro 2 and Premiere Pro 4 to name but two, and also you have not be very forthcoming in bug fixes.

    So your Management of Adobe Premiere to date leaves a lot to be desired, so as per a school report..................could have done better 6/10

    As for.....deliver value....... that is subjective and certainly does not apply to CC for existing users where the cost of useage over a typical CS version cycle is considerably greater than an outright purchase.

    Oh......Sarbanes-Oxley Act.........is not applicable in countries outside the USA so we out there should have received more from Adobe, as it is we pay way more than USA users as it is even allowing for local taxes.

    Harm gives the anology about renting a house, you only rent a house because you cannot afford to buy one, you stop paying rent and you get thrown out, unable to use the house you have lived in and loved for years, rent is dead money. 

    Have a reasonable subscription cost my all means (not the extortion that the CC is) and a perpetual license available to those who want them, otherwise Edius/FCP/Media C/Vegas etc will go thousands of users. 

    I also have Edius and it is not that different to Premiere except it is more stable, will playback more video tracks, and it requires a lesser specified PC, to name but 3 areas where it is better than Premiere

    Steven L. Gotz
    Steven L. Gotz
    Inspiring
    June 2, 2013

    Whichever way you turn it, Adobe is in the market to make long term profits for their shareholders. Nothing wrong with that. At least as long as they have customers that are willing to part with money that they feel is well spent on Adobe products. If Adobe lacks clarity in communicating their intents and where the 'value added' is for their customers, who are the generators of the long term profits, everybody loses. Adobe loses customers and thus revenues, customers are disgruntled, market share drops and ultimately shareholders feel they don't get the rewards they expected.

    OK, Adobe is US based and must adhere to US law. Completely logical. Their development work is done to a large extend in the US (and India for all I know), their CC servers are US based, their distribution is US based, activation servers are US based, their exports are based on US restrictions, in short their stance it that we, the customers, are dealing with a US based company that abides by US laws. That is fair, I think. At least it is very clear.

    One may wonder whether a different accounting method for perpetual licenses would not have been easier to circumvent the SOX legislation and avoid this outrage, but that is something that all the much appreciated presence of Adobe staff can not alter. Those decisions are all above their pay-grade as they are above mine, but then I'm not a staff member, so that is no surprise.

    Personally, I think that bug fixes and improving functionality (something that works only partly) of existing products but not adding new functionality is perfectly legal even under current Adobe accounting policies and US law, but, like Steven I'm not a lawyer, nor an accountant.

    What is more disturbing in my eyes is the fact that Adobe is not clear at all. If everything is based on US rules, regulations, law, accounting principles and other relevant restrictions, why not treat all customers the same as US citizens? Charging them the same prices, giving the same educational benefits, etc.

    But Adobe does not do that. They overcharge European customers significantly in comparison to US customers, using the excuse of 'the cost of doing business locally'. Well, development, distribution and activation is purely US based, nothing local. So where is the local cost? Is that an Apple like approach, that uses tax treaties and havens to allocate revenues to a local company, lowering corporate taxes and increasing net profit for the shareholders over the back of European customers?

    In my consulting practice I have seen many US based companies, to whom US law applies, using transfer pricing to lower corporate taxes by diligent use of tax treaties with for instance Ireland, Luxembourg, Switzerland and the Netherlands in a completely legal way (well, sometimes borderline). These actions resulted in a significant boost of the bottom line, sometimes in the tens or even hundreds of millions per year. I suspect Adobe is no different, but that makes it even worse and more bitter for European customers. They get ripped off by Adobe and Adobe profits extra because of the transfer pricing and tax-treaties. I can't substantiate this, but from a business point of view, using these 100% legal loopholes, a company would be crazy not to use them.

    When a European customer goes to Microsoft, B&H or whatever other US based company, they can use their credit card to pay for the order they place. They don't need a US credit card, but Adobe does not allow that. Is it for the tax reasons mentioned above that a customer can only buy locally from a US based company?

    On the one hand Adobe claims to be US based and adhering to US laws, but at the same time it hides behind 'local business' for which a completely different set of rules apply. That is not trust inspiring or consequent for me.

    This leads me to two different requests:

    1. Equal pricing excluding local taxes around the globe, since this is a global business, all originating in the US, so pricing should be US based. No discrimination based on very vague arguments that do not hold. CC is a worldwide approach, with development, electronic distribution, electronic activation, electronic payment, electronic updates, everything is done from US based server parks, so there is no argument whatsoever to discriminate based on country of purchase.
    2. Create an exit strategy for those customers that can not or will not pay rent anymore to get a perpetual license, not a downgrade to CS6.

    like Steven I'm not a lawyer, nor an accountant.

    Um, actually, while I don't mention it often, I was an accounting major at California State University at Long Beach once upon a time in a land far, far away.

    I also spent time in Corporate Management when SOX first became law and have had extensive training regarding the ins and outs of it.  It has been a decade, and I don't do that kind of work anymore, so I can't represent Adobe, or argue with them regarding SOX. Not anymore anyway. But the real issues for Adobe, as has been pointed out elsewhere, are communications and financial disclosure. SOX doesn't stop you from being open and honest. You can still announce what people need to know. You just have to do it in a fair manner so that all parties have equal access to the information. It really isn't relevant to this issue.

    You see, that is why I just don't care about it in this situation. Even if subscription does or does not make it easier to release minor fixes and features, I am more concerned with how the subscription model would have changed things had it been in place a few years back in order to be able to determine how it might benefit us in the future. I think that is what people really want to know. Nobody cares about the details of SOX. They care about the ramifications. I want Adobe to tell us about those by providing examples we might be able to wrap our heads around.

    As I said, Adobe Marketing needs to get their heads out of the sand and produce some information that either convinces you to go along with the new model, or assures you that other software is in your future. This bickering is the fault of lousy communication skills on the part of people who seem to know how to get pretty pictures on the web site but not how to communicate in words that long time users can use to base the decisions on.

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