I was chatting with photographer Mike Powell the other day and he was asking about the new rental model Adobe is using now. While I am on the record as being fully against it, I found a nice break down with a more concrete business view on why it is such a bad idea.
While creating a predictable revenue stream from high-end users, Adobe has created two problems. First, not all Adobe customers believe that Adobe’s new subscription business model is an improvement for them. If customers stop paying their monthly subscription they don’t just lose access to the Adobe Creative Suite software (Photoshop, Illustrator, etc.) used to create their work, they may lose access to the work they created.
Second, they unintentionally overshot the needs of students, small business and casual users, driving them to “good-enough” replacements like Pixelmator, Acorn,GIMP for PhotoShop and Sketch, iDraw, and ArtBoard for Illustrator.
The consequence of discarding low margin customers and optimizing revenue and margin in the short-term, Adobe risks enabling future competitors. In fact, this revenue model feels awfully close to the strategy of the U.S. integrated steel business when they abandoned their low margin business to the mini-mills.