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Adobe Considers Withdrawing from Asian Markets
Max Groff writes "This brief ZDNet article (printer-friendly version) describes how Adobe is considering leaving its Asian markets due to the apparently high levels of piracy across the Pacific. This change would not only cut off the marketing of Adobe products to Asian markets, but also halt the development of much of the company's Asian-language software."
A professor at a local US University handed our help desk a CD labeled "Adobe & Macromedia's Greatest Hits, Vol. II"
She wanted us to install Photoshop and Dreamweaver off the disk. The help deskers explained how it was a pirated copy, and how her dept. could legally purchase the software for significant discount for educational purposes. She protested, saying it was legit because she'd paid 5 dollars for it on her travels in Malaysia.
I do not advoate software piracy. I've been weaning myself off of illigitimately copied programs for several years now, and encourage friends to also not use pirated materials.
That said, I believe that the equivalent dollar cost in pirated products is highly mis-leading. People who pirate software wouldn't buy the programs if they lost access to it. They would just do without.
Chizen said in the article that it can cost up to $750,000 to produce a Chinese-language version of a product, and extensive piracy makes it difficult for Adobe to recoup those costs.
That said, I can appreciate theirt reasons for leaving. If they spend $750k to produce the Asian version, and don't sell sufficient copies to recoup costs and profit, then they should leave. My understanding is that most companies require a 15% return-on-investment from a product, or they shut it down.
ShoutingMan.com
Try as hard as you can to rationalize it, but if they are losing money there it makes good sense for them to drop out of the business there. I mean, cmon, piracy rates are over 90%! A vast majority of the software there doesn't make them any money and if they can't sell enough copies to recoup their losses, who can blame them?
So, now the pirates have two choices: stop pirating (or at least to the same extent), or lose language support for their copies.
I mean, they can pirate English versions still, but I'm sure they would prefer copies in their own languages. It is their own fault for this happening.
I don't believe that they have actually lost $4 billion, because not everyone buys copies, but even if 1% of those people would have bought copies they would have lost $40 million.
"I have not failed. I've simply found 10,000 ways that won't work." --Thomas Edison
"Asia can be a BIG market"
Asia *is* a big market, but piracy apparently makes it much smaller. They're leaving because the real market (the one that buys their products, from them) is too small. Any other company coming in will have exactly the same market Adobe has, and they will face the same problem.
Yes, it's justifiable to pay $600 for a flimsy cardboard box and a plastic CD.
If you make $600 with said flimsy cardboard box and plastic CD, I think the product has paid for itself.
Justification's from Adobe's view? If the $600 price funds the development of the next version of Photoshop and keeps employees and the company afloat, that's justification.
Can anybody possibly justify taking property that doesn't belong to you?
GPL Deconstructed
I see a lot of posts here saying that this will not stop piracy of the Adobe's products, because it will eliminate the only legal way to obtain the software, so people will be forced to pirate it. Adobe knows that, but that's not the point. The point is that Adobe is actually spending money to support the Asian money, and that money is wasted.
And the men who hold high places must be the ones who start
To mold a new reality... closer to the heart
It doesn't hurt them at all to have English language versions pirated in Asia, in fact they probably prefer that to having their competitor's products pirated.
But if it costs $650,000 to produce an Asian languages version of their products (a number I can easily believe, having done localizations of much smaller products), and they don't recoup that cost, there's no point in doing it.
This is news?
Look, for 15 years US software houses have been charging nearly ten times as much money as they should for their applications. Our original AMX Pagemaker desktop publishing software launched in 1985 for the BBC Microcomputer sold for £40 (about $65), which was just within the budget of most people who needed it. Today your typical application or application suite is $300-$500. And then, you have to constanly pay to upgrade. And I'm a Mac user, so I now have to 'upgrade' all my apps from OS 9 to OS X which will cost thousands. What makes all this far more serious is the complete niavity of American business culture to the reality that the rest of the world (and I include the UK in this) have MUCH less money. To a Brit, spending £50 ($80 approximately) is equiv to a middle class American spending about £250 ($350). For those who do not believe me, if you're a Brit, go live in the US for a few years. If you're an American, come live here. So, in Asia, where the standard of living outside of wealthy communities is even lower than the rest of the Western world, the situation is even worse! Price it right, and people will PAY for it. People want their original user guide, colour CD insert etc. We did it! We created http://www.onumber.net at just £14.95 (about $23) a pop for 5 years, feature upgrades included. It's on the net, so why should we screw people for more? A little more global understanding and increase use of ASP business model, and mass software piracy will be a thing of the past.
O'WONDERWe're working on it.
That's like selling what, 10 copies of photoshop? ;)
-- Dan
It's not that pirates wouldn't buy the software, it's that some pirates wouldn't buy the software, some pirates couldn't buy the software, and some pirates would have to buy the software.
The question is how to separate all of them enough to target the payers, and get them to pay.
People who do without aren't interesting to this equation or argument. It's the people who make money with the product, and people who need the product, that should be targetted.
In a very fair market way, if there isn't enough pirates who can pay, if they had to, to support the product, the product should go away. If there is enough pirates who can pay, then they can afford to sell, as long as they can convince the pirates to pay.
The question is how lack of an Asian version of the product will affect the market. Will Chinese users, for example, start to use English or Japanese versions? Older versions? Does this mean that Chinese OS X users will be, literally, up the creek?
GPL Deconstructed
Despite the whining from the (lets not mince words here) pro-piracy segment of the slashdot readership, this sounds like a perfectly sound business decision.
Face facts people, corporations are not charities. If they can't get a Return On Investment, they need to invest money elsewhere. Nor will any other business simply step in, because they're not going to get any ROI either. This has already elminated entire markets. The Hong Kong movie business is basically dead because piracy is so culturally acceptable in China.
Your comparing two very different things. People don't need Photoshop to edit images, hell most people couldn't make use of most of the features even if the package was free. Photoshop and applications in its price range (and higher) are priced based on the work that went into them and the value of what comes out. If someone can use Photoshop to make an image for an advertising champain that they get payed thousands of dollars for then the 600$ price tag of Photoshop is well worth it. Having people bitch that they cant afford Photoshop to edit pictures of their grand kids is just dumb. There are lower end packages that cost less then 50$ which will serve their purposes just fine.
Bottom line, if you think the software costs too much then you don't really need it. Go use something else, be it Gimp or Adobe Image Effects. Dont bitch and moan about the cost of Photoshop and don't condone the piracy of the software.
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
Cool, if I'm ever pulled over by a cop and have a happen to have some marijuana or hashish on me, I'll just tell him I bought it in Amsterdam since it's legal there and I paid for it fair and square.
That should keep me out of jail.
I don't think Adobe expects to curb piracy at all. But that's not really their goal -- their goal is to spend their R&D money in a way that they can get the most bang for their buck.
If they have to spend $750,000 to develop a Chinese language version of Photoshop, which only sells a thousand legitimate copies (at $600/each), they've just lost money. They'd be better off putting their $750,000 in a savings account (except maybe a BofA savings account, which would charge them a $300K "We gotta count your money" fee) and selling only a hundred copies of their English language version in China.
What's tougher to determine is if, by not creating a Chinese version, they're hurting themselves in the long-term. Let's say they don't develop a Chinese version of Photoshop. Somebody like JASC could develop a Chinese version of Paint Shop Pro and gain a large following in China. Then, if we assume that at some point in the future, the Chinese market is profitable, Adobe might be in trouble. Everybody in China will be used to using Paint Shop Pro, and might not bother swapping over to Photoshop.
It's a question of determining when it'll be profitable to spend money developing Chinese language versions of software, and deciding just how much the Chinese care about getting a native language version of their software.
"Do you expect me to talk?" "No, Mr. Bond. I expect you to die!"
I am a programmer. I do it for a living. I make a living because people can't just take what I make and sell it without my knowledge, without paying me. These people make a mockery out of my livelyhood.
.sg, .my or .cn ISPs.
We care about companies breaching GPL-licenses, and we should care about these people breaching the commercial software world's licences.
Asia will never get a software industry of their own if they continue this way, and will be doomed to producing cut-throat priced commodity hardware for the rest of the world.
I hope Adobe makes it real hard to use their programs on computers where the clock is set to Bangkok, Kuala Lumpur or Beijing time, or the internet connection reveals they are connected to
If they can't pay for commercial saftware, they'll just have to settle for GPL'ed alternatives!!!
Then how are we supposed to be able to buy or download cheap pirated versions of adobe software in the US??
I have known Chinese (in China) who own little more than 2 white shirts, a pair of pants, and a bicycle.
However, they may use a computer at work to do personal jobs. They may run software on a computer at work that costs, in the U.S., more than their entire net worth.
This is not lost profit for companies like Adobe. It is free advertising and free trademark promotion.
No amount of law-making or law enforcement will make these people pay hundreds of U.S. dollars for Adobe Photoshop. However, advertise that you need someone who knows how to use Photoshop, and hundreds will apply. Is this a bad thing?
People in the U.S. get little accurate news of other countries. They often unconsciously make the assumption that other people are as rich as they are.
U.S. Senator Biden, who is an intelligent and educated man, and who is the Chairman of the U.S. Senate Foreign Relations Committee, doesn't even pronounce the words correctly, yet he talks of changing (my article, see the Biden interview) the Saudi government and controlling the development of the government of Afghanistan. If Senator Biden is like this, make a guess about the knowledge of other countries of the average Adobe executive.
Adobe executives should not consider that every pirated copy is a personal attack on Adobe profitability. There are many social situations that require more social sophistication than that.
Bush's education improvements were
As I said in an earlier message (which is playing hard to find), I knew someone from India living in the United States. He made minimum wage to make his way though college. His father was one of the top engineers in an Indian company. Guess who had the higher salary? My friend, not his father.
A $15,000 yearly salary in other countries is enough to make one live like a king. In India (I've been told; perhaps someone can comment), a $15,000 U.S.-equivalent salary is enough to have a personal cook prepare your lunch, and a personal servant bring it to your workplace.
$15,000 may seem like a lot to many students, but there are countries out there where people make $1.50 an hour or less. Companies make items abroad where it is cheaper yet attempt to sell said items abroad in the same countries at U.S. pricing.
Personally, I'm predicting a severe devaluation in the U.S. dollar to come sometime within the next century or so; one cannot price an item at price A in country X and price B in Y without a third party Z coming along and moving the item from A to B at a lower cost. Given that most other currencies are worth less than the United States', the dollar likely will be devalued as we start kicking and screaming and wondering why.
how does Adobe afford the production costs
Release the non-trade-secret parts of the application as free software. That'll help a bit. Splitting the most proprietary parts into modules priced at $49.95 a piece might help further.
and the support costs
"No support except to registered users." That's one of the proposed models for making money off open source.
and the bandwidth costs
If they can get their install down to 10 megabytes (perhaps by not including all that d*rn clip-art), bandwidth becomes relatively cheap.
if they don't make any money on top of the distribution costs?
For downloadable software, bandwidth costs == distribution costs.
Will I retire or break 10K?
The Acrobat format is not proprietary. I have the entire spec in a binder right here. I downloaded it from Adobe and printed it freely, then used it to create code that writes PDF files.
.ps files. But I can't see spending much time decoding a paragraph that contains the phrase donkey jiz in it.
I have written web based programs that generate PDF without using any Adobe code. (When you need to be in control of the exact layout and 75dpi is not good enough, it is a great choice.)
TeX is happy to make PDF files. My Mac is happy to write anything I wish out as a PDF file instead of printing. In linux I have a little program to convert postscript to pdf. No Adobe software required on those systems.
I do tend to use Acrobat Reader for reading them, but I also use xpdf (launches much faster under linux) and, under OS X, Preview to read them.
I don't even understand that part about scanned documents and
It is possible that there is another format that provides precise display at high resolution in an easily navigable, on demand downloadable format, but I haven't heard of it. Long live PDF.
Everyone thinks they are the biggest market in the world, but here are some facts about china's "market".
Out of 3 billion people, 900 million of them are rural peasants who don't have a pot to pee in. These are people that are so poor that they go for months without even seeing currency, let alone using it.
100 million of them are rural farm workers who may sometimes receive a "paycheck", but who are not employed for long periods of time. These people make a fraction of what a McDonalds grill cook makes in the US.
Of the remaining 2 billion, you have a tiny elite of maybe 120-80 million people who make money in a range that is remotely similar to the west. Of all the people who receive somewhere in a living wage range, maybe 500 million of them, save 40% of their income and use 60% to live. They do this because their economy is fragile and they are subject to losing their incomes rather easily. Compare that to Americans where 4% of people's income (on average) is saved.
The Chinese do not have descretionary income to spend on software. This is what Adobe is really coming to grips with. If it were made to be incapable of stealing the software, they would just go without!
Companies that make money in China are like Coke-a-Cola, Pepsi, Marlboro. These are companies that make 80-90% of their money outside the US anyway. The rest of the companies (like Adobe) tread water for years and never turn the corner. This is the reality of the Chinese market: they are an export economy with a weak domestic economy. A place where slavery was "abolished" in 1929. A place where children participate in forced labor programs to pay for their educations. Where you recieve the death penalty for selling a fossil you dug up in your own backyard to a non-Chinese buyer.
(I have no idea why we have a normalized trade relationship with this country and yet Cuba is still under an embargo)
Any other company coming in will have exactly the same market Adobe has, and they will face the same problem.
Not necessarily. Depends on whether they're clever enough to find a way to adapt to the Asian market instead of throwing up their hands and running away.
When pirated copies of XENIX were running every bank in China, a SCO sales guy told me: "Trying to convince the Chinese not to pirate software is a waste of time--they'd just laugh. But they want to buy manuals, and the idea of paying for books is part of their culture. So let 'em copy the software if they want, but charge 'em for the doc, and you can make lots of money in China."
In most cases, a handshake means more than a contract. Contracts in china are worth S_ _T. The government isn't going to enforce a law the entire country percieves as stupid. The chinese culture believes in practicality and utility. Take the phrase "Kung-fu". It isn't just martial arts. The phrase is applied to anyone who has refined/exceptional skill and strong work ethic. A businessman can be said to have "kung-fu" in the art of negotiation. A teacher can have "kung-fu" in inspiring students.
Adobe needs to first learn about the culture and understand it before they try to dictate how chinese people should behave. Chinese are very proud of the culture, history and tradition. No self respecting chinese is going to roll over just because adobe says so.
This is a good point that really doesn't get made often enough -- namely, that every time a proprietary software company takes action to combat illegal sharing, they open the door a little wider to Free software. Usually this argument shows up when antipiracy measures are adopted to increase the cost of copyright infringement. One hopes that some of those who can no longer afford (or, as in this case, will no longer be able) to illegally acquire a given piece of proprietary software will turn to Free alternatives.
Mind now, I don't fundamentally care how many users gFoo has. Userbase is important to Free software in a couple of indirect ways: some of those users will submit bug reports or patches, or help in other ways with development; also, many users of Free software make it difficult for proprietary vendors to lock users into their products through closed formats, much less force new users to their product by making such formats into de facto standards.
Should Adobe go through with this withdrawal, I forsee (or at least hope for) benefits to Free software in that some former unlicensed users will go on to help make real Free substitutes for Adobe products -- e.g. Gimp has potential, but it ain't Photoshop yet -- or help i18nize various packages to their native locale.
Quantum mechanics: the dreams that stuff is made of.
Photoshop Elements != Photoshop. It's a severly GIMP'd version (all puns intended).
The GIMP is ok for making web graphics. You're never going to do any serious photo retouching, CMYK color correction, under color removal, trapping, or any other necessary pre-press operation with the GIMP, though. It just isn't ready to handle the complex, precise, and finicky nature of real four-color (or more) offset press preproduction work.
Does the GIMP have monitor color calibration? Does it have color profiles for myriad pre-press proofing machines and/or offset presses? Does it have Pantone (TM) licensed color libraries? Last time I checked it didn't.
Unless China only ever produces web sites I doubt the GIMP will be a 100% useable solution.
Corel could step in with Corel PhotoPaint. It's not as good as Photoshop for the items I mentioned above. but, it's worlds better at those chores than the GIMP is. It's still not a 100% solution, though, as I will explain below.
Assuming that since the GIMP is vaguely similar to Photoshop Elements it will be able to replace Photoshop is a very slanted view on the whole situation.
Even if the GIMP could do 100% of what Photoshop does that doesn't solve the problem of providing all of the functionality of all Adobe products to China. That is, unless the GIMP has gained the ability to do short document layout (Pagemaker), long document layout (InDesign), SGML based technical document publishing (Frame), vector illustration with 100% PS3 compatibility (Illustrator), motion graphics (After Effects), video editting (Premiere), web based vector animation (Live Motion), and PDF creation and editting (Acrobat series). That list isn't all inclusive, either.
Just like GIMP != Photoshop, Photoshop != All Adobe Products.
Here's a hint. Find an agent in China. Get him to print and box the documentation. Let him keep the a large share of the profits.
Over a decade ago, Autodesk faced the same problem. The English version of AutoCAD was #1 in the USSR, but the copies were mostly pirated. So Autodesk cut a deal with the USSR for a bulk buy of a custom Cyrillic version. That brought in a revenue stream, and the USSR got a version that their non-English speakers could use.