Strategy and business model evolution at Adobe: Competing in digital media software industry

Abstract

The digital media software (DMS) industry is an important yet relatively underexplored industry in terms of dynamics, evolution, market potential and growth opportunities. Using Adobe as an exemplar, this case highlights the evolution of the DMS industry with a focus on Adobe’s key business segments, business model and business strategy – product diversification and inorganic expansion – specifically capturing Adobe’s response to changing market needs. Why Adobe made an important yet risky strategic decision to transition from the time-tested perpetual licence price model to a cloud and subscription-based pricing model is the primary focus of this case. We cover the contextual imperatives that caused this strategic shift and the repercussions of the strategic decision on Adobe’s overall performance and future growth trajectory. This case attempts to familiarize readers with the dynamics of the DMS industry and allow them to assess Adobe’s customer value proposition and business models by utilizing concepts and frameworks from the strategy, technological innovation and platform business domains.