No Jedi Mind Tricks Necessary

Whether there are corporate profits or not the Grinch, it seems, has struck twice in one calendar year for Adobe (NASD: ADBE). You heard my forecast about Adobe’s 2008 earnings here in last year’s posts and who can forget my venting in 2007 regarding Adobe’s negative user support strategy.

Now they have to cut 8% of their global workforce. Looks like the San Diego office will be shut down from the tweets I’ve read and MDowney, the Flex evangelist I was following in my Flex vs. Silverlight series is moving on as well… Good luck to everyone.

From the San Francisco Chronicle: Adobe laying off 600 employees

Adobe Systems in San Jose is laying off 600 employees and will restructure its business, the company announced Wednesday after the stock market closed.

Bottom line analysis for 2009: Adobe will survive in one form or another however all their software programs may not.

No Compelling Reason To Upgrade

Without the Vista mandatory upgrade upswing working in Adobe’s favor, I stated that this year’s sales were going to be significantly lower. I said sell short because there was no compelling reason to upgrade and people would figure they could get by just fine with last year’s model of CS3.

Panic in the streets of Bangalore… MadCap Flare Emerges

Well, ‘panic’ is not entirely fair to state about the Mumbai area after their recent security fiasco. 

Gorillas in the Mists

MadCap Software is currently pounding Adobe on the Technical Communication workflow front. According to the MadCap October press release two independent blogging polls showed MadCap Flare to be the new Gorilla in the Game, promoted up from Chimpanzee:

Flare was identified as the authoring application of choice by more than 39 percent of respondents to the surveys conducted on behalf of the HAT-Matrix.com and I’d Rather Be Writing technical communications blogs.

The surveys represent the first time that Flare, which debuted in March 2006, has seen higher customer use than any other competing solution–including legacy applications that have been on the market for more than a decade.

Add to this the 2008 recession stone skipping across the water and it means sobering trends for ADBE, losing ground on several fronts. From the San Francisco Chronicle:

The layoffs are in progress and represent 8 percent of Adobe’s global workforce, a spokeswoman said. They will affect all regions and business units. Adobe plans to offer more details Dec. 16 during its regular earnings conference call.

I’m not wishing for anyone to be out of work this holiday season. I was initially made aware of this by backtracking the ever-increasing Google hits from my article that detailed last year’s Adobe Holiday season layoffs when I stated: 

Personally, I think this goes back to (my opinion) the unconscious Adobe strategy to offshore all assets. Eventually everyone not performing 80 hour workweeks will lose their jobs in San Diego in favor of India based talent.

Sorry Adobe, No Freeloading From Microsoft’s OS Changes

Finally the insanity of upgrading a major suite like a brain-damaged maze rat hitting the lever for another piece of cheese has been closely examined by the bean-counters.

Again from the Chronicle:

“The global economic crisis significantly impacted our revenue during the fourth quarter,” Adobe’s president and chief executive officer, Shantanu Narayen, said in a statement. “We have taken action to reduce our operating costs and fine-tune the focus of our resources on key strategic priorities.”

Narayen said the chief cause of Adobe’s problems is weaker-than-expected demand for the company’s latest software, Creative Suite 4, which began shipping in October.

In short, economic buyers are looking at the WHY involved with an upgrade to a product every year and not seeing much substance. “Why are you wanting a new version of a product to do your job that you’re already going to do…?”

It simply means the value of the upgrade from CS2 or CS3 to CS4 isn’t compelling enough. I love this part of Narayen’s quote in the Chronicle:

The suite combines several tools used by illustrators and designers and is central to Adobe’s plans to create software that can connect the Web with PCs and phones.

Referring to the Adobe Media Player gambit they were trying to leverage against Microsoft? I’m going to lump that in with the Rich Internet Applications battle analyzed last year.

From CharlesJeter.com – Rich Internet Applications War Is Brewing last May:

Apparently Adobe is betting on its Flash penetration giving it an advantage in shoehorning users into downloading the Adobe Media Player, and Microsoft enjoys the simple advantage of being able to offer Windows Media Player as they have done for nearly ten cycles as an integrated part of the Windows operating system.

In short, Microsoft is continuing to severely pound Adobe in the Media Player world. Adobe is getting no traction with this tactic in this economy.

MSFT is still continuing to attack the Macromedia-originated Flex with Silverlight. Now that their Flex pitchman Downey is out of the Flex role he dominated, I’m wondering how MSFT will respond to this opening. If they’re smart, they’ll hire Downey to take apart his old firm. He has guts and he’s technically smart as well.

Where will Adobe turn? They’ve got plenty of money in the bank to ride this out, it might just be cutting back on innovation.

Theory: Adobe is not going to spend dev money where it’s failing

When your flagship product suite is not selling, what happens to the lower-tier products and the people who support them? They’re expendable. They get cut. 

The second part is directly in the TechComm world. Again, I predicted this last year:

If stock prices start slipping, where are they going to make their cuts? I am predicting that it’s now or never for RoboHelp; if they don’t perform by mid-2008, resources could be pulled off for other products that make a higher profit.

With RoboHelp sliding quickly to the middle of the pack of TechComm tools those resources may not be saved for a rainy day when they could be repurposed to save the company’s bottom line.

I expect axes to cut across new features and for sales of lower tier products like Adobe TCS to stay flat for a good two years.

By the way, Tom Johnson took an undeserved beating in the HATT forums about his survey, and his survey results were redeemed by Char’s hat-matrix.com evaluation.

RoboHelp is, by virtue of Adobe’s business model, going to have resources cut. Even Captivate is in jeopardy; sales figures are probably great but what has Captivate’s upgrade selling point been since the Technical Communications Suite (TCS) came out?

What is the compelling new feature set for TCS?

Bundling mid-grade products together to beat an emerging market leader has failed. According to the two surveys, that strategy just didn’t sell customers on the value of the Adobe TCS products. Even if overall sales are still high, the economic conditions mean the automatic buy orders aren’t going to be authorized.

What does that mean for Technical Communicators?

If you see names changing in the Tech Comm blog at Adobe, it might be time to learn another tool. Being able to add the MadCap Flare software list to your repertoire might net you the job you need should your position become affected by the economy. 

If you can wait another year for the suite upgrade then you do it when times are tough and every dollar counts. Or you migrate to another tool for cost or cost-benefit reasons.

What does this mean for Investors?

It means there’s enough confusion going on that other companies might pull significant market share away from Adobe. That weakens them and makes it easy for takeover.

Related Articles:

• Prove My Help Authoring Tools Survey Wrong <- IRBW
• HATT Survey Results <- Hat-Matrix.com
• Adobe & MadCap’s Cold War: Market Share
• Adobe and MadCap’s Cold War: Who’s the Superpower Today?
• Is MadCap Flare Now Leading Adobe RoboHelp In HAT War?
• Friday Comments Review: RoboHelp vs. Flare
• MadCap Software’s New Digs | More Adobe Layoffs
• My Position on Adobe and RoboHelp
• Adobe’s 3Q Profit Beats Predictions <- 2007

Well, here we go again… Acording to the zedia flash blog, we’re not seeing what we should through Google:

It’s a pretty shocking title with all the fuss about the new flash player for Google and Yahoo, but I will try to explain why I came to this conclusion. I suggest you read about the seven test cases I did because that’s mostly what my reasoning is built on. I am going to explain point by point what happened in the experiment.

From another reputable blogging source comes this: SWF indexing is a red herring, and you should all know that by now

So, here we go again, Google has annonced that they will index SWF files with a new algorithm and the whole Flash blogosphere echobox is ringing with the words of the clueless. The announcement shows how little Google understands about Flash websites and needlessly diverts the attention away from developing a real solution to Flash website search engine optimization. The reaction to Google’s announcement also shows how little the Flash bloggers understand about the problem. I’m not sure which of these two is the most annoying.

The bottom line is that SWF indexing is a lost cause, it will not make a difference, and the only thing that has changed is that now Google is even better at finding nothing.