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Adobe Systems SWOT & PESTLE Analysis

ID : 52403453 | Jun 2018 | 18 pages

COMPANY PROFILE - Adobe Systems

Business Sector : Information Technology

Operating Geography : San Jose, California, North America

About Adobe Systems : Adobe was started from the garage of the founder John Warnock in the year 1982. It was founded by John Warnock along with Charles Geschke. The company is headquartered at San Jose, California. Adobe is one of the most well-known and trusted brand in software development. Photoshop, Acrobat Reader, PDF and Adobe creative cloud are some of the most well-known products of Adobe Systems. Adobe has a variety portfolio, they are mostly into multimedia and creativity software’s, with more focus on rich internet application software development. As of 2017 Adobe employs 17000 people around the world. Its revenue for the year 2017 is US $7.30 Billion and for 2016 is US $ 5.85 billion. Adobe has a worldwide presence and operates from around 24 countries.

Adobe Systems Revenue :
US $ 7.3 billion - FY 1st Dec 2017 (y-o-y growth 24.7% growth)
US $ 5.85 billion - FY 1st Dec 2016

Competitive Analysis of Adobe Systems

The SWOT analysis for Adobe Systems is presented below:
Strengths
Weaknesses
1. Product Diversification
2. Trusted brand
3. Industry leader in digital signatures
4. Strong presence in digital imaging domain, publishing and text domain
5. Growth of business in APAC region and Middle East region
6. Switch from licensing to subscription
1. Expensive pricing of adobe subscription
2. Flaws in security
3. Severe debt issues
4. Poor customer service
5. Lack of marketing
Opportunities
Threats
1. Growth in digital marketing
2. Increased awareness about mobile application in growing markets like India
3. Partnership with Microsoft
4. Collaboration with Nvidia
1. Piracy
2. Cyber security
3. Alternatives for adobe’s prime products
4. Foreign currency fluctuations
5. Open Source Software

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Detailed SWOT Analysis of Adobe Systems

 

Strength

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Weakness

1. Expensive pricing of adobe subscription: Although Adobe has shifted from its traditional licensing model to subscription model the prices of these subscriptions are considered very costly by many individual users. The monthly subscription price for the complete creative cloud product is $49.99 which is considered very costly in most parts of the world. Although Adobe has monopoly in these areas, many startups as well as established companies like google, Microsoft and many other companies are trying into get into these domains and the pricing of these products are less than Adobe. This can impact the preference of the users.

2. Flaws in security: Some products of adobe are considered vulnerable to security breaches, for example using adobe reader to gain access to personal computers is one of the most notorious ways used by hackers. Also there are many instances in Adobe’s history where there are data breaches and data leakages. A security researcher Mr. Alex Holden, chief information security officer of Hold Security, characterized this Adobe breach, which affected Acrobat, ColdFusion and numerous other applications, as "one of the worst in US history". According to Web analysis from January 1, 2015 to September 30, 2015, Adobe Flash Player comprised eight of the top 10 vulnerabilities leveraged by exploit kits. Other leveraged vulnerabilities affect Microsoft Internet Explorer versions 10 and 11 (CVE-2015-2419) and Microsoft products including Silverlight (CVE-2015-1671). Also a data breach on October 3rd 2013 impacted atleast 38 million users, the attackers obtained access to costumers’ IDs and encrypted passwords, as well as too many inactive Adobe accounts. The company did not make it clear if all the personal information was encrypted, such as email addresses and physical addresses, though data privacy laws in 44 states require this information to be encrypted.

3. Severe debt issues: Adobe is known to acquire a lot of competitor companies. In order to acquire these organizations a lot of free cash is necessary and the same is obtained by Adobe with the help of heavy debts, as of 2017 the interest paid by adobe towards these debts are very high and is eating into shareholders profitability. In 2017 Adobe has paid around 74 million USD as the interest expense and is 3.43% of the operating income as per the annual report and is exposed to a debt of 1881.42 million USD.

4. Poor customer service: Although Adobe has an army of extremely user friendly and advanced products; a lot of customers complain that adobe doesn’t hear to the requests of the customers. Forums are rife with consumers complaining that Adobe is very abysmal at handling timely refunds, product cancellations and upgrade supports. A lot of their products do not support upgrades or are incompatible with new releases. Customer feedback must be taken into account to develop the most popular and profitable products. The lack of robust customer support mechanism is a potent weakness of Adobe systems.

5. Lack of marketing: Although Adobe systems is the market leader in most of the product categories it serve, there are many products in adobe systems arsenal which has wide application and are least known in the market, the best example is the suite of sound editing software provided by Adobe systems is not a well versed name in the market but has wide applications and is quite an holistic offering by Adobe. Adobe Scout is such software which is used for 2D graphics and text rendering, and 3D graphics rendered via the Stage3D application programming interface (API), but the software is not famous and is rarely used in spite of its advanced features. Another such application is Adobe Muse which helps a user to create websites without writing any codes, but the lack of marketing led to the downfall of Muse and is going to be wrapped by 2019.

Opportunity

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Threat

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The PESTLE/PESTEL analysis for Adobe Systems is presented below:
Political
Economical
1. The Trump Effect
2. Digitization drive in emerging economies
1. Growth of IaaS
2. Fluctuation of foreign Currencies
Social
Technological
1. Swelling mobile app market
2. Apprehensions about privacy and safety of data
1. Evolution of platforms like SaaS and IaaS
2. Evolution of cloud technology
3. Faster mobile networks in developing countries
Legal
Environmental
1. Compliance with Government laws for use of digital signatures
2. Legislation to prosecute security breaches
3. Data protection requirements
1. Electronic document services
2. Engraining sustainability into work culture
3. CSR initiatives
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Detailed PESTLE Analysis of Adobe Systems

 

Political

This section is available only in the 'Complete Report' on purchase.

Economic

1. Growth of IaaS: According to industry research firm Gartner, infrastructure-as-a-service (IaaS) market will grow by 38.6% and is expected to reach $71.55 billion by 2021, a CAGR of 29.7%. With growth at this pace IaaS, will likely outrun software-as-a-service (SaaS) to become the 2nd largest sector of the cloud market in the next decade, behind only Cloud Advertising. Thus Adobe must capitalize on this growth opportunity.

2. Fluctuation of foreign Currencies: Users of Adobe systems’ products and services are present all over the world and foreign currency fluctuations are a great threat to the overall profitability of Adobe Systems. Also the revenue from the foreign locations is also affected due to the fluctuations in foreign currency. At the end of the financial year 2018, Adobe systems lost approximately 8.3 million USD due to currency fluctuations, growing oil prices along with the growth in the revenues from the APAC region can further impact the profitability of Adobe systems.

Social

1. Swelling mobile app market: Awareness regarding the importance of holding a mobile platform for carrying out day to day sales activities has increased by manifold after the outburst of the ecommerce platforms. Many corporations has realized the importance of providing mobile based services to the customers and this has set the platform for many cloud based service providers like Adobe Systems. Today, according to the latest Digital Future in Focus report from comScore, we're long past this tipping point in some countries with India, Mexico and Indonesia having more than up to 4 times higher smartphone vs desktop audience. According to PWC, 51% of all the digital ad budgets were spent on mobile. This fact is also supported by the data provided by Smart Insights which says that 80% of internet users will own a smart-phone. This Growth is expected to continue at least for a decade and is definitely positive for Adobe Systems.

2. Apprehensions about privacy and safety of data: Off late privacy has been a big concern in the software industry and Adobe Systems is no exception to it. There have been a security breaches In the Adobe systems before and these instances have sent some wrong signals to some of its clients. Adobe should come out with a robust security system and take care that the data of its clients is safe and secure. In October 2013 hackers stole the data of 38 million users of Adobe users and it is later revealed that this data is very lightly encrypted. Norton recently announced that it has found zero-day vulnerability in the Adobe Flash player which is widely distributed.

Technological

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Legal

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Environmental

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Copyrights and Disclaimer

Adobe Systems SWOT and PESTLE analysis has been conducted by Anupam Bangaru and reviewed by senior analysts from Barakaat Consulting.

Copyright of Adobe Systems SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.