Advertising, publishing industry woes weighing on Adobe Systems

Adobe Systems, maker of graphic design and electronic document software, is going through a slow patch in sales right now. Two of its key customers – the advertising and publishing industries – are struggling during the current recession.
Magazines and newspapers are hurting because advertising sales are down. Journalism Web sites provide a depressing litany of news about newspaper and magazine layoffs and closures.
The problems of the advertising and publishing industries are one reason for slow sales of Adobe’s Creative Suite 4 product family, which launched in mid-October 2008. CS4 revenue is running more than 20% below CS3 at the same point after its release, Adobe Chief Financial Officer Mark Garrett told me June 16.
“People are starting to talk about CS5 already, but we think there’s still a lot more opportunity here,” Garrett said. Creative Suite is upgraded every 18 to 20 months. Following that pattern, CS5 would be out in mid- to late 2010. The Creative Suites include such separate design products as Photoshop, Illustrator, InDesign, Flash and Dreamweaver.
“The silver lining in all of this is we could get some pent-up demand for CS5 because we’ve potentially got people who in this economy just won’t migrate to CS4,” Garrett said. “But we’re a long way from giving up on CS4 adoption.”
I asked Garrett about the struggles of print media and its impact on Adobe’s business.
“To your comment on newspapers and magazines, yes, some will fold, but others will move to the Web,” Garrett said. “I think we will have the opportunity to sell potentially different tools and services as they move to the Web than we were able to do before. Similar to the way Photoshop used to be just about print and then moved to the Web. I don’t think the impact is going to be as severe as you might think. We’re just going to be selling them tools to help them get on the Web now.”