Adobe 2000 Annual Report Download - page 31

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During fiscal 2000, overall revenue increased 25% compared to fiscal 1999, driven
primarily by increased licensing of products in our Web Publishing, ePaper Solutions,
and Cross-media Publishing segments. Our Web Publishing segment provided the
majority of the revenue growth in fiscal 2000, as it grew 36% from $394.1 million in fiscal
1999 to $536.6 million in fiscal 2000. The increase in revenue from this segment was
primarily driven by the strength of Photoshop 5.5 revenue during the first three quarters
of fiscal 2000 and the release of our Photoshop 6.0 product in the fourth quarter of fiscal
2000. Also contributing to the growth in this segment in fiscal 2000 compared to fiscal
1999 was the increased revenue from our Web and Dynamic Media Collection products,
which were first introduced in the fourth quarter of fiscal 1999, and increased licensing of
our LiveMotion, Adobe Premiere, After Effects, GoLive, and ActiveShare products. The
increase in revenue in this segment was partially offset by a decline in revenue from our
PageMill and PhotoDeluxe products, due to product lifecycle timing and pricing.
Revenue from our ePaper Solutions segment increased 61% from $129.3 million in fiscal
1999 to $207.8 million in fiscal 2000 due to the continuing penetration of Acrobat and its
related technologies into major industry sectors and various government agencies.
Revenue from our Cross-media Publishing segment increased 10% from $353.9 million
in fiscal 1999 to $390.5 million in fiscal 2000. This $36.6 million increase was primarily
due to the new release of Illustrator 9.0 in the third quarter of fiscal 2000. This segment
also benefited from the new release of FrameMaker 6.0 in the second quarter of fiscal
2000, as well as increased revenue from our Adobe Design Collection, Adobe Type
Manager, Acrobat InProduction, and PressReady products. The increase in revenue from
this segment was partially offset by a decline in revenue from our Adobe Publishing
Collection product, primarily due to the introduction of our new Adobe Web, Dynamic
Media, and Design Collection products, and a decline in revenue in both InDesign, due to
slower adoption of this product in fiscal 2000 compared to the adoption upon the initial
release of this product in fiscal 1999, and PageMaker, due to product lifecyle timing.
The increase in revenue from the above-mentioned segments in fiscal 2000 compared to
fiscal 1999 was partially offset by a 5% decline in revenue from our OEM PostScript and
Other segment, as it decreased from $138.2 million in fiscal 1999 to $131.5 million in
fiscal 2000. Revenue from this segment decreased in fiscal 2000 compared to fiscal 1999 due
to lower royalty rates paid by our OEMs and the ongoing weakness in the monochrome
laser printer market as a result of the following factors: loss of royalty revenue from
Hewlett-Packard Company’s (“HP”) desktop monochrome laser printer division, which
has been incorporating a clone version of Adobe PostScript software into its products
since the fall of 1997; a decline in the average selling price of monochrome laser printers;
and an increase in the use of inkjet printers, resulting in weakness in the monochrome
laser printer market.
Although we experienced better-than-expected results in fiscal 2000 due to the strength
of the high-end color and digital copier markets, we expect our OEM PostScript license
business to decline approximately 10% in fiscal 2001 compared to fiscal 2000.
During fiscal 1999, overall revenue increased 13% compared to fiscal 1998, due to
increased licensing of products in the Cross-media Publishing, ePaper Solutions, and Web
Publishing segments. Excluding revenue from businesses divested in the third quarter of
fiscal 1998, revenue increased 16%. The Cross-media Publishing segment provided the
majority of the fiscal 1999 revenue growth, with a 30% increase from $272.2 million in
fiscal 1998 to $353.9 million in fiscal 1999. The increase in revenue from this segment was
primarily due to increased licensing of our Adobe Publishing Collection product and the
introduction of InDesign in the second half of fiscal 1999. The increase in revenue from
these products was partially offset by a decline in revenue from PageMaker, Illustrator,
and FrameMaker, primarily due to product lifecycle timing.
Additional revenue growth in fiscal 1999 was achieved through our ePaper Solutions
segment, as revenue more than doubled compared to fiscal 1998, from $58.0 million in
fiscal 1998 to $129.3 million in fiscal 1999. This increase was due to the release of Acrobat 4.0