Adobe 2009 Annual Report Download - page 5

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creating visually-rich sales presentations, engineering or architectural proposals, real estate flyers and school year books.
Educators utilize our solutions to educate future creative professionals, as well as create their course content and online
eLearning-based lessons. Hobbyists use our tools to create distinctive online communications and photo albums, community
newsletters, Web blogs, animations, videos and Websites for family, friends or community organizations.
With the increasing use of the Web as a means for marketing and advertising, we believe a key driver of our Creative
Solutions business will also be the growing amount of Website content created by our customers to deliver impactful and
compelling Web-based experiences for their constituents across multiple screens, including PCs, mobile devices, and
Internet-connected living room electronics such as televisions (“TVs”). We also believe those who manage Websites will
want to utilize Web analytic data and other Web usage metrics to optimize their Websites and content to improve the overall
experience of their sites.
Another driver of our Creative Solutions business is the growth in the use of digital devices such as digital cameras,
digital video cameras, multimedia-enabled computers, DVD players, scanners, Web-capable image and video-enabled
handheld devices, cellular phones, gaming consoles and other non-PC Internet-connected devices. In addition, faster Internet
broadband speeds have made the Web a viable platform for the delivery of rich media, especially digital video. In turn, the
growth in the use of high definition TVs (“HD TVs”) and video is driving the need for HD-enhanced video tools to produce
HD content for movies and commercial television, as well as the need to deliver or repurpose this content to be viewed on the
Web across PC and non-PC based devices.
As the use of digital photography and digital videography grows, we believe creative professionals and professional
photographers throughout the world will continue to require software solutions to edit, enhance and manage their digital
photographs and digital videos. Increasingly, we expect these users to desire software solutions which leverage the Web as a
platform to deliver the capabilities of some or all of the features they desire in desktop software. In addition, we believe
creative professionals and Web developers are increasing their use of digital video streams over the Web to create more
compelling Websites. We believe professional videographers are upgrading their systems to support HD video content
creation, enhancement and delivery. We also believe hobbyists will use, with more frequency, digital imaging and digital
video software and online hosted software services as they purchase more affordable digital cameras and digital video
cameras.
Creative Solutions Business Summary
In fiscal 2009, our creative business was adversely affected by the global economic recession and the weak general
macro-economic environment. This caused revenue for our Creative Suite 4 (“CS4”) family of products to be more than 20
percent weaker than revenue achieved with the prior version for a comparable period of time since release. Despite this
economy-driven weakness, we maintained our focus on driving adoption of our creative products during the year –
particularly with large media companies and enterprise customers. Our CS4 family of products, which first shipped in fiscal
2008, incorporate Adobe technologies used by creative professionals into six Creative Suite editions and thirteen individual
creative products, providing offerings for the various creative disciplines our customers desire. These disciplines include end-
user markets such as interactive design for print and Web, as well as rich media and digital video creation. After significant
weakness in the first two months of the fiscal year, licensing of CS4 products remained stable through the remainder of the
year despite the uncertain global economic conditions in end-user creative professional markets.
During the year, we also maintained our focus on meeting the digital imaging and video software needs of professional
photographers, professional videographers, business users and hobbyists. Adobe Photoshop is an essential tool in these
customers’ workflows and they 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. Despite maintaining strong market
share for our professional Photoshop products during the year, revenue decreased significantly on a year-over-year basis due
to the macro-economic environment.
In the dynamic media market, which includes users who require new and advanced digital video and animation
technologies, we continued to focus on driving adoption of our new digital video-based technologies. We released Adobe
Flash Media Server 3.5 (“FMS”) in the fourth quarter of fiscal 2009 which provides improved dynamic streaming and HTTP
delivery capabilities, performance improvements and enhanced digital rights management capabilities for H.264 video and
digital video recorder functionality. The launch of FMS, which is licensed either directly by our customers or licensed
through our Flash Video Streaming Service via Content Delivery Network (“CDN”) partners such as Akamai and Limelight,
helped to maintain the broad adoption of Flash Video (“FLV”), the video file format compatible with Adobe Flash Player as