Adobe 2012 Annual Report Download - page 4

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complements our digital media franchise, bringing together the art of creating content with monetization and the science of
measuring and optimizing it, enabling our customers to achieve optimal business outcomes.
To capitalize on the potential in these two market areas, we made several significant changes in key areas of our business
during the past two years. We have made investments to increase the deployment of some of our products through new SaaS
models, and to offer a new subscription model for our creative products. We believe these business model changes allow us to
target new users, as well as increase the amount of recurring revenue we generate as a percent of our total revenue, thus creating
the potential for our business to be more predictable.
We have also invested in the development of new products that address emerging customer needs in these two market areas
and represent new revenue sources. In addition, we made several acquisitions during the past two years to broaden the scope of
our solutions. We believe the new products we are bringing to market, combined with products and technologies we have acquired,
will make our Digital Media and Digital Marketing solutions more compelling to our customers.
While we have increased our investments in certain products areas, we have also reduced our focus on certain products.
The cost savings resulting from the reduced focus on certain product areas has been redeployed as we continue to invest into
research and development and sales and marketing to drive higher growth potential in our two focus areas.
Because of this transformation we have undertaken, as we enter fiscal year 2013 we believe we are uniquely positioned to
be a leader in both the Digital Media and Digital Marketing categories where our mission to change the world through digital
experiences resonates well with customers.
PRODUCTS AND SERVICES OVERVIEW
This overview is organized by our three reportable segments: Digital Media, Digital Marketing, and Print and Publishing.
For each segment, we provide an explanation of our market opportunities, a review of our segment results, and a discussion of
our strategies to address our market opportunities in fiscal 2013 and beyond. See Note 18 of our Notes to Consolidated Financial
Statements for further segment information.
Digital Media Segment
Digital Media Opportunity
We believe we are at a key inflection point in the history of digital communications. A convergence of major trends is
occurring, which in turn is driving changes in consumer behavior and expectations. These trends include the rise in use of
smartphones and tablets, increased internet access speeds, new business models driven by online commerce and app stores, the
increase in media and entertainment made available online, the impact of online social communities, and software delivery
transitioning from prior PC delivery models to cloud-based services.
These trends and changes are having a profound impact on our customers, who are interacting with content on a daily basis
and want to regularly share and collaborate with colleagues and clients. Adobe customers, large and small, are rethinking their
online presence, addressing concerns such as how to make a site more dynamic, how to manage visitors from both PCs and mobile
devices, whether to invest in web browser-based applications or create individual mobile apps, and how to transition from legacy
content delivery methods to new models which offer new revenue streams. For our customers, these challenges create a great deal
of complexity in their workflows and cost structures. For Adobe, these challenges and complexities our customers face are
expanding the size of the markets we can target.
We realigned our company entering fiscal 2012 and created our Digital Media business unit to address these opportunities
as we believed these market conditions presented significant opportunities for Adobe to rapidly deliver product innovation, access
new market segments, increase engagement with our customers, transition our business to promote a recurring revenue model,
and accelerate our revenue growth. Our goal is to be the leading provider of tools and services that allow individuals, small
businesses and enterprises to create, publish, promote and monetize their content anywhere.
The flagship of our Digital Media business is Adobe Creative Cloud, which is an ongoing membership service that lets our
customers download and install the latest version of any of our Adobe Creative Suite desktop products, and other creative software
like Adobe Photoshop Lightroom and new HTML version 5 (“HTML5”) based products and services. Creative Cloud members
also get online services to sync, store, and share files, participate in creative communities, receive product training, as well as
publish digital magazines to the iPad, develop mobile applications, and create and manage websites. We believe Creative Cloud
is redefining the creative process and becoming a destination place where our creative customers can obtain everything they need
to create, collaborate on and deliver engaging digital content.
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