Adobe is one of the companies that have a wide array of services. From image manipulation to website creation. From video editing to document signings. As investors, sometimes, we difficult to find the key information from Adobe’s earnings report due to its number of services. Through the Business Model Canvas of Adobe, we hope we can provide a clear insight. How much contribution of each segment to revenue? What is the most important product? For those who are in a hurry, you could inspect the figure below to get quick insight.
What is a business model canvas example?
The Business Model Canvas of Adobe explains what products or services deliver earnings for the company.
In FY 2021, Digital Media segments generated $11.5 Billion and were responsible for 73% of Adobe’s revenue. This figure is much larger than The Digital Experience segments with 24% ($ 3.8 Billion in revenue). Digital media segments include all flagship and most popular products like Photoshop, After Effect, Premiere, InDesign, Illustrator, and Acrobat. Due to its revenue contribution, it is safe to say that Adobe is about these apps.
What are the key components that compose the business model canvas?
Of course, the first and foremost thing is the customer. Then the cost, product preposition, etc. Let’s explore.
So, who is the audience? The Artist
Because digital media contribute significantly to the revenue, our focus should be on this segment. Who is the target audience? We all know the answer, the designer community. From graphic designers who create logos, magazine covers, annual report layouts, and web, to video editors who upload their content on Youtube or Instagram. Adobe Photoshop, Illustrator, and InDesign are the top choice for these kinds of jobs.
The Customer Relationship: Behance
It is mandatory for a company with Adobe level to provide reliable support for its customer. When your Creative Cloud gets in trouble, Adobe is always there to give you assistance. It is great but it is a standard for world-class companies, so it is not one of the business edges. Everybody does it. The thing that gives a decent advantage to Adobe is its designer community, Behance. Acquired in 2012, Adobe knows very well that the community will drive more users and at the same time strengthen customer retention.
Value Proposition: How could a newcomer compete with Photoshop?
Though Adobe has a wide product and services, the quality is no joke. Almost every product is superior to its peers. Not only Photoshop, but other line up like InDesign and Afer effects are also simply the best. This does not need an explanation. A new app like Canva seems to have potential, but it is not for serious creators. Adobe Photoshop has much more features and support.
Also, Adobe bundled all of its services in its Creative Cloud, so a designer or creator could access other Adobe apps easily. Something that competitors can’t replicate. Imagine this, a graphic designer could get and promote his idea in Behance, using Adobe Photoshop and get the images stock from Adobe stock. This ecosystem is unparalleled.
Cost Structure: In What things does Adobe spend a lot
Surprisingly, Adobe does not spend the most money on research and development. The budget for promotion is the largest component of Adobe’s business. We believe that Adobe does not need much R&D since the product itself is too good and needs only a little improvement regularly. With its own community, Behance, along with the large budget for promotion, it is almost impossible for competitors or newcomers to challenge Adobe.
Imagine spending $3.4 billion to promote your services. Only a few could do that.
more: https://investingdeck.com/financial-ratio-adobe-gross-margin/
Which business model s most successful for Adobe?
A business model canvas of Adobe tells you what makes money for Adobe. The Business model is another thing, it is about how that product is delivered.
It is Adobe Photoshop (and co) that makes money, but how that Photoshop is delivered to the customer is another story. After the boom of mobile devices and cloud technology, Adobe switched to a subscription model for its product. A content creator or designer subscribe to one or more Adobe product and pay (them) on a monthly basis (or yearly basis, depending on the plan).
Technically, this scheme allows Adobe to give updates more frequently through the cloud. Financially, the subscription-based model gives the San Jose-based company more streamlined revenue. And, don’t forget, the regular and more frequent updates bring Adobe steps ahead against competitors.
If any.