Acrobat sales "essentially flat" in Q2, PDF authoring tool pilot underway
Accelio expectations prove overly optimistic in early going, Chizen says

13 June 2002

By Kurt Foss, Planet PDF Editor

In its quarterly tele-confab with industry analysts today, the pronouncements from the Adobe Systems' executive management team seemed less about good times than old times. Not that there weren't a few positive indicators, all things considered, on which CEO Bruce Chizen and his top managers could dwell.

The primary flashback came in the enthusiastic reciting of sales figures for a new version of Photoshop, the company's primary revenue-generating workhorse and industry-leading graphics program for most of the past decade. Adobe had been explaining away some portion of previous quarters' sluggish product sales as resulting from dedicated Macintosh-based users -- the platform on and for which Photoshop was originally developed, and on which it exclusively ran for the first couple versions -- putting off purchases until Adobe released the first OS X-native version of its flagship graphics software application. Photoshop 7 is the reportedly long-awaited solution.

Based on the gleeful reporting of sales that Adobe says are running ahead of Photoshop 6.0 for the same post-launch timeframe, the OS X preference projections may prove to have been on target. A slight shift in the Windows-versus-Macintosh ratio for Adobe product sales -- 69-to-31 in the most recent quarter compared to 73-to-27 a year ago -- was attributed primarily to sales of the new release of still-Mac-strong Photoshop.

On a less-encouraging note, Chizen reported that so far Adobe is not seeing any signs that the OS X version of Photoshop is providing a "pull through" on sales of other OS X-friendly Adobe products.

When the previous version of Photoshop lost some ground as Adobe's revenue leader in past several quarters, its commercial Acrobat product more than rose to the challenge, even "defying logic" in the opinion of some analysts with its seemingly inexplicable year-over-year sales during a time when world economic conditions were wreaking havoc on many technology companies. Acrobat's bullish performance elevated it to high-profile status, with PDF becoming a core technology across the company's line of products and services.

The not-as-good news about Q2 sales of Acrobat -- "essentially flat" -- was the first since version 5.0 shipped more than a year ago and began setting records for the company's ePaper Solutions Group. Part of the comparative slowdown, Chizen said, can be traced directly to the difficulty of matching up to Acrobat 5 when it was first out of the gate. Likewise, the version's relative age would seem to be another factor, as with any software product moving through its major version release cycle. Asked about that, Chizen was quick to say that unlike some of the feedback Adobe received about the previous version of Photoshop, there are no indications that any prospective Acrobat customers are delaying purchases while awaiting a future version. (Adobe gave no specifics on when an Acrobat 6 product might be on the horizon, other than to respond to an analyst's question that the product is 'on track historically.'

In explaining the less-stellar Acrobat sales for the just-finished quarter, Adobe said most of the slowdown came in the sales of its shrink-wrapped product. Interest in site- and volume-license sales, on the other hand, continues to be strong, according to the management team. Adobe recently re-focused some 60 percent of its sales staff on direct Acrobat sales, with an emphasis on volume sales to enterprise and government users.

Chizen pinned most of the uncharacteristic ePaper products uninspiring performance on issues stemming from and ramifications of its recently completed acquisition of the Accelio Corporation. In retrospect, he said, Adobe's expectations were probably overly optimistic and unrealistic for the short term, especially considering the deal wasn't consummated until mid-quarter. With the realignment now more-or-less completed -- including a "reduced headcount" (there are now 3,510 Adobe employees) from eliminating 'redundancies' after merging the Accelio workforce and workload into Adobe's -- the company hopes to begin generating profits from the opportunities it foresaw in the Canadian company's heritage in the world of large-scale electronic forms solutions. Another highlight during the quarter was Adobe's global agreement with SAP, which Chizen said resulted from their interest in Adobe's acquisition of Accelio.

As mentioned, Adobe sidestepped a leading analyst query about the timing of a future release of Acrobat. But Chizen did confirm that the pilot project -- to determine the feasibility of and pricing stricture for an Adobe-developed, low-cost PDF-authoring tool -- that he announced during the previous quarter's fiscal results conference is currently underway in an undesignated European test market.

Adobe also cited an industry report updating the comparative market share of Adobe's InDesign versus long-time leader QuarkXPress that reportedly reflects a significant one-year shift -- with InDesign moving from 27 percent during a four-month period last year to its current 52 percent share. Noteworthy among the referenced recent adopters of Adobe InDesign: Microsoft


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