Qwertyuiopasdfghjklzxcvbnmqw

ertyuiopasdfghjklzxcvbnmqwert
yuiopasdfghjklzxcvbnmqwertyui
opasdfghjklzxcvbnmqwertyuiopa
sdfghjklzxcvbnmqwertyuiopasdf
ghjklzxcvbnmqwertyuiopasdfghj
klzxcvbnmqwertyuiopasdfghjklzx
Assignment On Adobe System Inc.

cvbnmqwertyuiopasdfghjklzxcvb
nmqwertyu
iopasdfghjklzxcvbnmqwertyuiop
asdfghjklzxcvbnmqwertyuiopasd
fghjklzxcvbnmqwertyuiopasdfghj
klzxcvbnmqwertyuiopasdfghjklzx
cvbnmqwertyuiopasdfghjklzxcvb
nmqwertyuiopasdfghjklzxcvbnm
qwertyuiopasdfghjklzxcvbnmqw
 Assignment On Adobe System Inc.

Adobe System Incorporated

Case Summary

Adobe Historical Background:

Adobe was founded in February 1982 by PhD scientist John

Warnock and Charles Geschke, who established the company
after leaving Xerox PARC in order to develop softwares to
facilitate printing of integrated text and graphics. The company
name Adobe comes from Adobe Creek.

Adobes first product was postscript for desktop publishing. It

provided interface between computer programs and output
devices like printer.

Q: How was postscript establishing de facto

standard?

Established Postscript as a de facto standard because:

1. Make Post script an open standard (not open source)

2. Spark up and bring revolution in desktop publishing.
3. Strategic alliance with Apple (Printer), Aldus (Application), and
4. Linotype (Fonts) Postscript-based desktop publishing system
5. Encouraged third-party applications to be developed
6. Provide technical support by good documentation of
programming (The Red book)
7. Introduced High quality and professional looking fonts and
their customization.
2
 Assignment On Adobe System Inc.

8. Developed in-house applications

9. Adobe Illustrator software introduced in march 1987(first
high quality illustrator)

10. Invested in developing a postscript font library

11. Investing 16% of sales in font development Strong

commitment
12. Made it easy for printer manufacturers to incorporate
Postscript
13. Created a boilerplate controller design fast product
development
14. Targeted early adopters
15. Graphic artists helped establish a foothold
16. Introduce photo editing softwares in adobe Photoshop.

Q: How did earn money from postscript,

despite its being open standard?

Making money from Open standards

1. Licensing fees and upgrades
2. Because it is an open standard not open source
software.
3. $210M in Postscript royalty in 1998
4. Develop application software that utilizes Postscript as
complementary product!
5. Even though it is open standard, knowing the inner workings
of Postscript, Adobe can innovate faster to earn.
6. Print publishing (Exhibit 4) was 35% of sales in 1999
7. Sales of fonts in postscript format Was very successful at
establishing Postscript as standard and extracting value
from it their share price increased 49% a year through
1995
3
 Assignment On Adobe System Inc.

8. Successful in Postscript but now facing Microsoft in eBooks

Q: Which firm is currently in a stronger
position to control de facto standards in the
eBook space: Adobe or Microsoft?
However Microsoft is developing aggressively, despite of this
adobe is in better position to lead de facto standard in
eBook space. Because:
1. Adobe has good relationships with publishers
2. 70% of publishers data is on adobe.
3. Adobe is open standard format but Microsoft is not.

The comparison of both is given below:

Adobe Microsoft

Installed base of Acrobat Microsoft controls >90% of user

readers is huge (Exhibit 1, desktops
200M Acrobat reader
downloads)

Web buy (digital rights Microsoft could bundle its

management) downloads reader with the operating
are much lower (Only 100M system (like they already did
downloaded) for Pocket PC operating
system)

Only 700K Glass book Microsoft could ease creation of

readers (optimized for MS format content with its
eBooks) need to increase Offi ce applications( Save As
penetration MS reader could cause

4
 Assignment On Adobe System Inc.

tremendous proliferation

Publishers content is However most publishers do not

already in PDF (70% of use Word. Adobe InDesign or
publisher archive in PDF, Quark Xpress dominate market.
pg. 10) MS had an agreement with
Quark

PDF is a superior technology Deep pockets Can tie up

(can support more content (publishers - exclusive
sophisticated graphics rights to Star Wars) and
distributors (online booksellers
Amazon)

PDF is open and MS Reader

format is not.

Q: What should Adobe do? How can they win the

standards war? Should they focus on eDocs or
eBooks? Will the eBooks market tip or will there
be multiple standards? How can Adobe make
money in this market?

Q: What should Adobe do? How can they win

the standards war?

Adobe should do follow the following some

suggestions to win standard war:
5
 Assignment On Adobe System Inc.

1. Create a critical mass around content, readers, and

distribution.
2. Make creation of PDF documents/books free is a good idea.
3. If MS offers free content creation then Adobe also would have
to match.
4. If PDF takes off competitors would emerge (open standard)
driving price down.
5. Adobe should make it easy to convert OEB documents to PDF.
6. Adobe should accept the contents of OEB and try to align
OEB with PDF to compete MS.
7. Establish more relationships with publishers and
online booksellers that Can probably not outbid Microsoft
for exclusive relationships on this front
8. Adobe should do Alliances: Perhaps BN.com is ready for
alliance if expectations are met.
9. Adobe should pursue print-on-demand because
Adobe has an advantage on MS in print. Customers would
probably first use print-on-demand before purchasing
eBooks.
10. Focus on the professional segment according to
Exhibit 7: Textbooks, Professional/Technical, and Travel
appeared to value eBook most high.
11. Adobe is in well positioned with professional/Technical,
therefore should continue to leverage this segment to start
the bandwagon effect for PDF standard.

6
 Assignment On Adobe System Inc.

Possibility Of adobe to MS to win the

standard war

It depends upon the growth expectation

1. If consumer market grows slowly Adobe would have the

luxury of solidifying its position with professionals and Large
installed base will help when consumer market takes off.
2. But if consumer market grows quickly would enable
Microsoft to establish the bandwagon effect around MS
reader.
3. Adobe should probably hedge its bet and pay attention to
consumer space in addition to professionals.
Q: Should Adobe focus on eDocs and eBooks
to MS?
1. To answer this question, it is extremely important to
understand that these two markets (eDocs & eBooks) are
separate.
2. Two distinct markets may have separate network
externalities and may tip in opposite directions.
3. Docs ($59B) market is larger than eBooks ($30.5B).
Professionals and students will read both eDocs and
eBooks on both PCs and dedicated devices.
4. Therefore, adobe should focus on market of eBooks &
eDocs according to the market trends.

7
 Assignment On Adobe System Inc.

Q: Will the eBooks market tip or will there be

multiple standards?

No, still adobe eBooks have no chances to tip the market

because they have to compete with two eBook standard
market MS and Gemstar. They have their own standards.
Somehow, adobes eBook market is growing slowly with
textbooks the leading segment.

Q: How can Adobe make money in this

market?

1. Adobe could sell its e-reader for a discounted price if the

buyer is willing to accept frequently exchanging ads on his
device. It will increase the revenue for adobe.
2. Digital Rights Management PDF Merchant and Webuy will
become one of the most important sources for PDF format
will significant revenue.
3. The adobe publishing house will also earn money if offer
eBooks in their formats.
4. By developing online eBook stores also generate profits.
5. Adobe should develop second source suppliers to emerge
the potential customers to earn revenues.