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Harm_Millaard
Harm_Millaard
Inspiring
June 1, 2013
Question

Todd, can you explain, please...

  • June 1, 2013
  • 1 reply
  • 20966 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.

    This topic has been closed for replies.

    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

    Jim,

    You don't seem to get my argument. Whether that is obtuseness, or something else, I don't know, but here is an example how this scenario works out, based on the tax-treaty with the Netherlands and based on current offerings:

    CC Sold

    in:

    Adobe US

    Sales price

    Adobe

    cost

    price

    Transfer price

    to Europe

    Customer End Price

    Excl. Local Taxes

    Local Taxes

    for Adobe

    on profits

    US

    Corporate Taxes

    Gross Profit

    after taxes

    Europe$ 100$ 50$ 65$ 135

    25% over

    $ 70

    		35% over $ 15$ 62.25
    US$ 100$ 50NA$ 100NA35% over $ 50$ 32.50

    Legally, there is nothing wrong with an internal transfer price of $ 65, when the cost price is $ 50. But you can see that the profit margin after taxes almost doubles for Adobe. Highly attractive for them, but European customers pay around 35% more than US/Canadian/Australian/NZ or South African inhabitants and at the same time Adobe profits significantly from the current tax-treaties. I could even make a comparison when I make assumptions about these internal transfer prices to different European countries which will show even far greater benefits for Adobe.

    This has nothing to do with rental versus perpetual licenses, it is only about fair trade and fair prices.


    Part of it is "Whatever the market will bear." Fair trade is what happens when a product is offered for sale and purchased by people willing to pay the price. If it wasn't fair it wouldn't have happened. Right?

    They charge what they charge because they can.

    Is it truly fair? It depends on who you are thinking about. It is certainly fair to the stockholders but not, perhaps, to the customers. But as long as people buy the product, there is no reason to reduce the price unless Adobe thinks they can get even more customers at a lower price - and have it be enough to make up the lost revenue from the price reduction.

    It is a game. Once with lopsided rules of course. There are winners and losers.  It isn't all win/win no matter how much we would like it to be that way.

    Personally, in the new information age, when things are downloaded from servers located anywhere the company wants to put them, I don't see a reasonable explanation for why the transfer price should be any higher at all. The translated versions, sure. But not the English language versions.

    If, in fact, the US taxes on overseas sales are less than taxes on US sales, then that should be used to reduce the transfer price. Yet, obviously, that isn't happening and probably never will. But you have to keep trying. That much is certain.

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