Artificial Intelligence: The Next Bet for Adobe
Bryan Lamkin joined Adobe in 1992. He is somebody who has grown with Adobe. From being an early Photoshop product manager to Executive Vice President and General Manager for Digital Media business, which includes Creative Cloud and Document Cloud, he has seen Adobe’s transformation over the years and how every time it has been way ahead of many technology giants – be it company’s acquisition to make its products mix attractive or changing the business model from selling perpetual license to pay-per-use. Under his leadership, the company’s Digital Media business continue to thrive like never before. Adobe exited FY16 with over $4 billion of annualised recurring revenue, and saw the net ARR increase in Q4 to $316 million. And the company is now innovating in areas like artificial intelligence, virtual reality and character animation. In an exclusive conversation with EC’s Mohd Ujaley, Lamkin shares the journey of Adobe’s Creative Cloud and Document Cloud, tryst with India and design giant next bet – Artificial Intelligence.
Many of Adobe products have taken their own journey, can you tell us about Adobe Creative Cloud and Document Cloud evolution and how are they placed in the market today?
The journey that Adobe has been on, since the time I joined – 1992. I was the early Photoshop product manager before advanced versions was launched. At that point of time, we were very focused on first generation of democratisation of communication. And that’s where desktop publishing, Photoshop, illustrator, PageMaker, Macintosh, apple age rider converged on this opportunity to take the capabilities that had been only available to a handful of professionals. If you think about it, from thousands of professionals and to make that available to millions. That is where all the core creative applications that we have at Adobe that started as desktop applications, many of them started their journey at that point.
After I joined, coincidentally there was a very important product that was in beta called Carousal (Adobe Acrobat) and that was where PDF and the Adobe Reader & Acrobat were created and we shipped it the following year until we started the journey the same time that we were started our creative journey or continued the creative journey. The product was primarily focused on the problems of the commercial printing and professional publishers.
The document cloud, this is before the internet started off trying to solve communication for all of the problems within the workflow. And quickly we learned that what we had actually designed with all the professional capabilities were important for the professional communication market applied to a broad set of consumers as well. And then the internet happened and all of a sudden people were downloading content from the web and then we made the reader available this whole document and momentum around PDF was created. That is kind of the genesis of each one of them.
They have taken a compatible journey because acrobat and PDF are very important to the creative workflow. At the same time, they have taken their own journey a little bit because the creative markets have extended beyond that early desktop publishing use case and added video and added multimedia and then the Web came about and added Web publishing that will be required by companies like Aldus. Which is the maker of PageMake, which gave rise to Adobe InDesign. And then we acquired Macromedia which they made Flash and DreamWeaver and integrated all these products within our product family.
And when you think about creative cloud today, we think about it as the almost like the one stop shop for creativity. Anything that you are trying to design or to create with imaging and video, photographs and animation etc. Anything that you are trying to do to make yourself stand out or make your organization stand out and express an idea to express a brand that really starts with creative cloud. Now it started with desktop applications where there is still a lot of the content that is produced for professionals but we realised that the competing environments and the communication environments were changing quite rapidly. And so we added the mobile application capability so that people could use mobile not just for communication and review of content but for actual capture and design of content. And then we realised that more and more people were using mobile as a part of their core toolbox making sure that the content stayed tightly synchronised with the creative process on the desktop.
That the cloud technology was really important and we came up with technology called creative sync that basically can let you capture the pattern on this table and extract the colour palette from that and extract the pattern that automatically gets piped into the creative cloud for me to reuse in another design. So it became a very much more the creative ecosystem and a creative platform than the heritage of very strong desktop applications. Creative cloud, it’s the world’s leading desktop application for creativity. It’s the leading companion mobile application for creativity. It’s a host of cloud services at the center around assets and collaboration workflows, synchronising content to several other important creative. And our enterprise customers are using this core functionality to manage all of their brand assets.
It is also an opportunity for us to extend beyond the applications and tools to the community and therefore we bought a company 4 years ago, which is now called Adobe Behance. It is the largest worldwide creative community that lets people get inspired by other’s content to share their work to get others opinions on their work and to really connect with other like-minded people in a professional creative community, this is the core part of creative cloud. In a market place, we felt that one of the key aspects of creativity is not just what you can generate yourself from a blank page but a lot of people want to get inspired and bring other elements in their designs.
Stock photography which is one of the key elements and that was the reason behind buying a company called Photolia in Europe. After redesigning and bringing it over to our platform, we launched Adobe Stock, which is one of the leading micro Stock services. Obviously, we are in a very unique position, we are the leading photography tool with Photoshop and Lightroom and we have the leading design tools. As a result, both sides of the market really are Adobe customers who want to make sure that we are bringing them together.
Where do you see these two products – Creative Cloud and Document Cloud, in the next 5 years?
I think it is a continuation of the journey we have been on. We have really putting mobility, cloud and artificial intelligence at the core of the creative cloud experiences which is a lot more than creative cloud experience and a lot more than what we can do in mobility. If you think about what is going on in India, is that one of the largest economies with a large millennial population who are really mobile only, still need very much cloud services and are still trying to express themselves creatively.
We think mobility is going to play a key role. Intelligence, if you think about all of the content and the data that we bring together as Adobe, all of the assets and this is not just my side of the business on digital media but the data that we agree for our customers on the digital marketing side of the business. We are in a very unique position to bring insights that will form decisions about design that will make people have more productive design to make it have creative business impact. We can bring all of that intelligence to creative cloud as well. We have this magic that we call the Adobe magic that we put inside our applications. When you erase somebody from an image in Photoshop, that is not an easy thing to do, there is a lot of science behind that they make sure that the background blends well together. And these are all the advanced algorithms that the researchers at Adobe have been working on for quite a while now.
From a business point of view, how has the direction been for these two products?
Creative cloud is biggest change that we have made as we have turned it from individual applications to a creative platform and we’ve moved from perpetual to subscription. So, that has been a great journey, and we have transformed and become the largest example of a company that has transformed into a perpetual desktop software business to subscriptions. And that has had a large impact on how we deliver the technology, the frequency of updates and the rate at which we can satisfy our customers. The entry price for customers to actually engage, used to be for creative suite that was a thousand dollars, now you can select from a different set of plans on creative cloud, you can start off for $10 for Photoshop and Lightroom together. You can get started at a much lower price point. In fact what has happened is as the economy has matured, there are a lot more customers now, who want to be legitimate customers of Adobe. We have seen a very positive impact and quite frankly very strong growth in many of the emerging markets because of the subscription price point. Therefore, that has been very important as we will continue to push cloud services and mobile services and intelligent content design services for these customers to solve their most complicated designs.
We will invest a lot more in Artificial Intelligence, 3D, virtual reality and augmented reality so that we keep the creative workflow at the heart of creative cloud very curt, focused on the most relevant in current market needs. Now, we are doing this right now. If you look at our video applications or imaging applications, we are putting in deep investments in all these areas.
On the Document Cloud side, it is equally a story of digital transformation, but I think it goes much deeper in terms of the business impact that it can have on an organisation that can be a government institution, it can be the driving relationships with the citizens and move from paper based processes to digital processes. We know that actually transacts digitally and share content as well as paper work in a digital format that is fully accessible. It can be a financial institution or an insurance institution that wants to transform their internal processes, therefore they are taking paper out of the system and replacing that with PDF based workflows that start with document creation and go all the way through document signature.
Bringing together those workflows and integrating them with the systems of record that are at the core of the enterprise whether there would be systems like Salesforce or anything else, that’s been an important focus for the document cloud. Document cloud just like the creative cloud, it serves individuals, small medium businesses and the institutions. It is a big opportunity at the heart of using documents as an engagement platform, but doing so digitally and using them as a platform for business transactions so as to accelerate engagement.
What verticals are you focusing on?
We have taken a fairly horizontal approach to our business. We touch tens of millions of customers with this technology and by doing so, we tend to focus fairly horizontally and put together a packaging of our offerings that are attracted to enterprises, educational institutions, and small medium businesses and are attractive to freelancers, individual designers, and photographers. Having said that on the document cloud side of the business, where we engage much more deeply with enterprise customers across financial, insurance and government would be the primary segments of the enterprise market that we are focused on.
Have you been able to make some inroad with government for document cloud?
We are in fairly deep conversation with the government. Given a lot of digitisation strategies in the government in India today, we have the benefit of having a very large development team. A third of the company’s development resources are in Noida and Bangalore. So, we have a strong presence in the country and that builds a deep understanding of the need from a technology standpoint.
How much revenue have these two segments brought to Adobe?
We are not in a position to share the specifics particularly at this point, also because this period being our financial year but it does suffice that government, financial, insurance enterprises or institutions segmented, are very important to our growth, not only to my business on the digital media front but more so on the digital marketing front.
Earlier in 2012, you started selling your product on pay-per-use basis. What impact it has on your sales and has the piracy and counterfeiting gone down?
We are witnessing good traction with the growth of our subscription offerings in the emerging markets and in the US. I think the price point has made it much more attractive to people who may not have been legitimate customers. Our business, conversions and the subscriptions have been an overwhelming success. There’s no doubt that we have gone from just serving a small base of customers to dramatically growing a new base of customers and growing subscriptions quite aggressively.
What progress have you made with Adobe Sensei?
Sensei is the brand that we have put at the head of all of our Artificial Intelligence technologies. So, if you think about it, any good company with engineers end up building a lot of technology and therefore, Sensei, for us is organised under a common brand and building a common cloud platform for the Artificial Intelligence. Now, what does that mean? For creativity, it is a lot of magical things that we do with Photoshop and have been able to visually search for images and automatically tag images etc. There is a lot of deep domain expertise that we apply in artificial intelligence techniques. In case of a document, you can scan a document on your phone and it can automatically recognise the structure of your document making it easier for people to understand the content and the overall intent of the document. It also makes things discoverable for your search in the process.
On the marketing side, it might be the deep understanding of the insights that come from the analytics making it automatic to do things like attribution analysis to be able to decide what effect a certain factor the market has on the performance of the business. So, all of these are examples of Artificial Intelligence, that’s at the heart of our creative, document and our marketing cloud. And where we are investing heavily, there over the past few years what you will see is – deepen our investment and to unify that effort under the Sensei umbrella.
How India is placed in Adobe’s overall scheme of things?
India is a very important part of our company, not only in terms of innovation but we have other business capabilities in India as well. But if you think about it, it is so broad reaching that’s it’s hard to really comment. This is the role that India plays because it is as broad as all of our California campuses as well. I have teams here that are working on the core of our document technology and a lot of the Artificial Intelligence associated with it. We have a big research team in Bangalore that is focused on Intelligence at the marketing cloud level so our advanced research organisations are here in India. Therefore, a lot of what you see under Sensei is developed here in India. So many of core imaging, videos, 3D, a lot of search capabilities like the Adobe stock, the micro stocks teams are all here as well.
We have global teams along with another team that is collaborating with the team in California or the team in Winchester, Hamburg, Germany. We have global sites but this is a very large footprint of our research and development. Therefore, anything that is important to Adobe is important to Adobe India since it is the growth market for our company. We realise that a lot of the trends that are important to us globally will be set in markets like India. Having developers here, they are disproportionately focused on mobile. Vast majority of our Android development is actually done in India. A large percent of the document cloud team is here in this building. This will allow us to advance, not just the state of the art for India but as a precursor to what is going to be needed in many other markets worldwide. Third of our employees are in India. So that is one large contribution I would say.
What role do you see Adobe playing in Digital India?
We are going to play a very large role in the digital transformation of India. So if you can think of the impact that we can have in government, education, enterprise, and small business. I think we have the platforms that will help them express themselves. We have the technologies that will help them stand out in a private consumer market and we definitely have the platforms that will help them improve their business processes around digital documents and electronic signature and more modern ways of engaging the customers and employees. We are proud with the role that we have played with building the technology, developing the right market understanding, and the right relationships in the market to play a big role.
