Adobe 2005 Annual Report Download - page 4

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4
PRODUCTS OVERVIEW
In fiscal 2005, we categorized our products into four principal business segments: Digital Imaging and Video,
Creative Professional, Intelligent Document and OEM PostScript and Other. On December 3, 2005, we completed
the acquisition of Macromedia, Inc. (“Macromedia”), a provider of software technologies that enables the
development of a wide range of Web and mobile application solutions, for approximately $3.4 billion. Coinciding
with the integration of Macromedia and the start of our 2006 fiscal year, we changed our reported business segments
to be aligned with our market opportunities and how we internally manage our combined businesses. Our new
business segments are: Creative Solutions, Knowledge Worker Solutions, Mobile and Device Solutions, Enterprise
and Developer Solutions, and Other.
This overview combines a review of our fiscal year 2005 business by our prior business segment classifications
with a discussion of our market opportunities and products as classified in our new business segment organization.
Fiscal Year 2005 Business Segment Review
Creative Professional Business Summary
In fiscal 2005, we maintained our focus on meeting the software needs of creative professional users through
the release of new versions of the Adobe Creative Suite. Available in two options (Standard and Premium), the
Adobe Creative Suite incorporates several of our technologies used by creative professionals into one product and is
a complete design solution that provides efficiency through improved product integration and powerful Adobe
Portable Document Format (“PDF”) workflow capabilities.
After achieving record revenue for our Adobe Creative Suite products in the first quarter of fiscal 2005, we
delivered a new version 2 of the Creative Suite products beginning in the second quarter of fiscal 2005. In addition,
we delivered version “CS2” of our individual Creative Professional software application products (Illustrator,
InCopy, InDesign and GoLive, as well as Photoshop from our Digital Imaging and Video business segment) in the
second quarter. These new releases combined to achieve record Creative Suite and Creative Professional revenue for
Adobe in the second quarter. This performance was followed by another quarter of record Creative Suite and
Creative Professional revenue in our third quarter, when the majority of the foreign language versions of the CS2
product family began shipping to customers. As was the case in fiscal 2004, many of our Creative Professional
customers chose to migrate from licensing individual products such as Photoshop to licensing the Creative Suite
products during fiscal 2005.
Another key component of our Creative Professional business strategy was to grow revenue for InDesign, our
professional page layout product. In fiscal 2005, due in part to the new features available in the CS2 version of
InDesign and favorable industry reviews, we enjoyed increased adoption by our professional publishing customer,
resulting in increased market share in the professional page layout segment. This success resulted in record revenue
for InDesign in fiscal 2005.
Digital Imaging and Video Business Summary
In fiscal 2005, we maintained our focus on meeting the digital imaging and video software needs of creative
professionals, professional photographers, professional videographers, business users and hobbyists. These
customers rely on Adobe’s digital imaging and video editing solutions to create and enhance many of the pictures
and video we see everyday in print, on television, in movies and on the Web.
During fiscal 2005, we delivered several new releases of our digital imaging and video software applications. In
the second quarter of fiscal 2005, we released the CS2 version of Photoshop – our industry-leading product for
digital imaging. This English version release was followed by the delivery of the foreign language versions of the
product, which began shipping during the early part of our third quarter of fiscal 2005. The release of Photoshop
CS2 received positive reviews from industry press and analysts, and generated strong revenue. However, as
indicated previously, many customers began licensing Photoshop capabilities via the Creative Suite products, as
opposed to licensing the product via its standalone version. This planned migration has impacted standalone
Photoshop revenue, and thus Digital Imaging and Video segment revenue, as we predicted last year.