Able to be at the keynote today where you saw a tremendous amount of innovation that the company has delivered in terms of all of the advancements that we were making with Creative Cloud. What I thought I'd do is just again set a little bit of the bigger picture context of the company talk about the 2 big growth opportunities that we see and then I'll hand it over to David who will talk a little bit more specifically about what's happening with Creative cloud and the creative community. And then Mark is going to go a little bit into the potential targets and how you should be thinking about this as a financial community. But I think it's clear that the same trends that we've been talking about, namely the move online, the move for all marketing to go digital for every device to be connected to the Internet. Those are the trends that in the macro point of view are really driving our business.
We continue to see consumers expect this immersive digital experience, both in terms of creation of content as well as in terms of the consumption of content. And so we continue to think that there's a tremendous opportunity honestly for Adobe to innovate around continuing to change the world through digital experiences. One of the fun things about my job is I actually get to meet a lot of customers and talk about some of the customer challenges that they're all facing. Customers like National Geographic who for many, many decades have been focusing on delivering the best compelling magazines who are now focused on what they do digitally and how they reinvent their business to take advantage of what's happening in the digital realm. Customers like Chanel who are thinking about what kind of multi channel experience they deliver to their customers, whether that be in physical stores or whether that be online.
Home Depot who are thinking about how mobile devices are going to change how people transact business with Home Depot, whether it's within the store, whether it's physically within the store or whether it's offline with them, as well as companies like Fairfax Media, who are thinking about how they move from a print first approach to a digital first approach. And what's common I think in all of these customer challenges when we talk to them is they're all struggling with what they do with this content life cycle that's increasingly moving digital. I think as all of you are aware, Adobe focused its strategy primarily on the make part of this business. And while there are challenges there, we think the larger opportunity for Adobe is really around solving the problems seated with the entire workflow in the content lifecycle, namely making, managing, measuring and monetizing. Respect to taking all of their print content and not just having that be content for print editions, but also have that be content for the web and increasingly, as I said, for mobile devices.
On the management side, we continue to see this explosive growth opportunity as everybody who has a website is increasingly thinking about how they move their business online and specifically re platform their website to make sure that they're delivering a great personalized, customized experience to people on smartphones as well as on tablet devices. The entire asset management space and collaboration for this content life cycle, we think is also a big opportunity for us between what we do on the making of that content and what we do on the managing. I think you're all aware of the fact that measurement in the ability to take data and action it or get insights out of it is where there is a lot of excitement within our customer segment. And when you talk about big data for marketers, I think Adobe has clearly positioned itself as one of the leading providers of analytics solutions. And our thought process with respect to measurement is quite simple.
If you don't know what your customers are doing on your website, you're probably operating blind. So it's more and more critical to understand exactly what customers are doing to measure that across all of the different channels and to be able therefore to use that data in providing in real time a real experience for them. And finally, in monetization, whether it's video that's going to increasingly move to IP networks, whether it's physical retailers who are increasingly moving their business online. I think the more we can transact business and close the loop with respect to monetization, we think that that's a big opportunity available for us as Adobe. Our strategy that we outlined over a couple of years ago is really through the combination of what we call the Creative Cloud and the Marketing Cloud to really have a complete solution that provides this integrated platform across the entire content lifecycle.
With Creative Cloud, our focus was really presenting the entire creative process, reimagining it so that we attract the next generation of customers being able to have a the broader canvas on which we can innovate at a far more rapid pace on building a more sticky business and on using that as surprised to really develop our solutions within the Marketing Cloud. And in the Marketing Cloud, what we announced a little while ago was really an industry leading marketing platform right now that not only does content management, but also does a lot of predictive algorithms in order to allow people to optimize the services that they are providing to their customers. And I think a unique opportunity for Adobe that you saw some of today is really in integrating what we do with the Creative Cloud in all of that content creation with the Marketing Cloud and all of the content delivery. Since today's focus is primarily on the Creative cloud. I'll touch on that a little bit later.
But let me briefly give you an update on what's happening with the Adobe Marketing Cloud. As you see on the slide, our vision there is really to put everything that the digital marketers need in one spot, whether it's analytics, whether it's social, whether it's advertising, whether targeting as well as web experience management in a single platform that is easy to both deploy as well as to administer, so that individuals can go from data to insights to actions faster and smarter than ever before. We announced 5 solutions. So we took the over 30 products that we had and combine them into 5 solutions. And the reason for the solution focus was really to up level the value proposition that Adobe delivered to marketers, to digital advertising agencies, as well as to online retailers.
And it's really a unique opportunity for Adobe to take the pain and complexity out of having to deal with these 30 solutions out for each of our customers. We also think that by delivering on these solutions, were able to provide a more integrated go to market with our sales force as well as increase the average selling price that we can deliver for our customers. And if individuals have bought into one of our solutions to cross sell and up sell them to the other solutions. As you see on the slide in front of you, the 5 solutions that we have is Adobe Analytics. We're clearly the leader in Adobe Analytics with trillions of transactions that we process.
What's driving the Adobe Analytics business right now is the move towards mobile. Increasingly people are measuring not just their mobile traffic, but also what's happening within mobile applications that are instrumented to be measured. The Adobe Experience Manager that we delivered through the acquisition of Day, that business continues to be on fire. There isn't a single company in the world that's not thinking about what their next generation content management, web experience solution should be. And the fact that we've integrated our analytics with the Web Experience Manager is a clear differentiator for Adobe with spec to every other company that delivers solutions in this space.
Adobe Target is where we actually make it actionable and where we convert it to enabling our customers to make money. And so the whole idea with Adobe Target is if we understand the analytics and we have the experience management, content management solution. We are able to deliver a more personalized experience than anybody else can. Adobe Social is a relatively new product and solution for us, but the key value proposition that we have in Adobe Social is that there is no other company that can actually understand what's happening with respect to listening or social sentiment and translate that back into what the return of investment is. The fact that we have the websites instrumented with Adobe Analytics allows us to uniquely identify which part of what's happening on the social sphere translates into revenue and translates into customer satisfaction for our customers.
And last but not least, Adobe Media Optimizer. This is about people increasingly moving their spend to be digital spend. We have over $2,000,000,000 in marketing spend under management and our value proposition is that we are able to spend that money with better return of investment across social, across search, as well as across display. 2 really exciting summits that we organized, both the summit in Utah that some of you attended as well as the summit recently in London were increasingly were incredibly well attended, which I think just reflects the interest that we are seeing in this explosive growth category. We continue to believe that the marketing spend within an enterprise will actually eclipse a lot of the other spend and we continue to be optimistic that we will drive 25% bookings sent revenue growth in this multi $1,000,000,000 category and we are on a run rate to achieve over $1,000,000,000 in annual revenue.
I think today was a really major step as we declared that the Creative Cloud is really the future platform for innovation for our creative customers, whether you be individual customers, whether you be small or medium businesses or large enterprises. Since we launched the Creative Cloud, we've seen tremendous adoption, customer satisfaction for people on the Creative Cloud is significantly higher for people who transact business with us in other ways. And we're able to, as you today deliver innovation on a far faster pace than we could by the traditional 12 or 18 month product cycle. In order to focus and align the entire company around the opportunity with the Creative Cloud, we decided as we mentioned today to make available all of the Creative Cloud innovation only through the subscription service. And I'm sure there are a lot of questions and we'll touch on the implications associated with that.
But I think what continues to be really exciting for us as we think about the Creative Cloud is it is now truly the single stop shop for a stunning set of creative applications, applications that are clearly the leaders in their respective categories, whether it's Photoshop for imaging, whether it's illustrator for artwork, whether it's in design, whether it's premier, as David mentioned right now, which is the leading category in video. So we have the leading applications and we can continue to innovate on a more rapid pace. I think having the ability to have access to all of those mobile assets across mobile devices with the synchronization of whether it's colors or fonts is a major step forward in enabling people to have access to all of their assets in a mobile way. And so collaborating with oneself has never been easier. I think you also saw the integration that we provided with Behance.
And so the 1,000,000 plus members of the Behance community now also have an ability to shared their work to find new jobs in a faster way than they've ever had before. So it's clear that the creative community has in the core of Adobe's business since it was founded over 30 years ago. But I think today's announcements show that we continue to innovate extremely rapidly in space. What I'd like to do right now is have David talk a little bit more about the specifics and then Mark will go into the numbers.
Thanks, Shantanu. So I'm going to do a fairly quick recap of what we announced this morning and maybe said a little bit of the context. The rationale, if you think about the changes that are happening in the industry and some of the things that Shantanu touched on earlier. There are a lot of changes that are affecting all of us, but are in particular profoundly impacting creatives. If you think about content, one of the things I mentioned earlier today was that 2.5 exabytes of data and content are created every day.
What that really means is for a creative professional is that they need to be much more dynamic and their content needs to stay more fresh because it's competing with more content in free as they deploy and they create their own elements. The second thing is devices. Device consumption is rising. So I think last year, we saw a 2x increase in terms of amount of time people are spending on devices. You put those two things together, the explosion of content and the consumption on devices, and creatives have to think very differently about how they create, where they deploy and how they actually reach their audiences.
So in other words, I have to create content in a more rapid place to keep up with the ever changing evolution of the creative of the content that's being created. But then I also have to make sure that the content I create can run across devices can run-in the browser and as an application. Collaboration is another area that's had a profound impact on this industry. We've been seeing a fundamental change because of the level of production work that goes creating content. We're seeing more collaboration across creative individuals and creative professionals than we've ever seen in the past, which means they have to collaborate more effectively and efficiently than they have in the past.
And file sharing has been cumbersome and error prone for various reasons, including things like file versioning and access to each other's content and keeping things in sync. But file synchronization isn't sufficient for a creative. They have to think about their brushes, their tools, their colors, their work and their workspaces. These are just as important to Accretive as an individual file. So they have to think about collaboration very differently.
And until this morning, there really weren't great solutions for how they actually work together. And last but certainly not least is community. We have we're seeing a profound shift in the creative community away from creation alone. People would create content, they'd create media that they wanted to push live, but it wasn't a part of their nature to actually share that with a broader set of creatives while they were going through that process. So we've been seeing that major shift and that's where opportunities for things like Behance have really risen and that why we're seeing such quick growth in those creative communities is because creatives now see the opportunity to leverage each other and do more collaboration in the open.
So with these as the background for driving the driving sort of change in the creative community. We saw obviously a remarkable opportunity to meet these needs and in the process of doing that completely restructure how we deliver innovation to our customers. And we think that's going to have a profound impact on how they create, how they collaborate and how they build their own personal brands as they create their content. And so this morning, we talked about what we're delivering. We talked about it coming out on June 17.
And it obviously continues to start with the great tools that we've always provided. So our CC apps, we talked about a brand change from CS to CC. These applications, we've made major updates, hundreds of features, new features across all of the CC apps. But unlike in the past, we didn't stop there. We've now connected this the creative apps into a creative process that really speaks to those other issues I just talked about upfront.
So when people when creatives save their work in the applications, all of their files and their folders are automatically synced across all of their devices. Once they have it in the cloud. They can then go ahead and collaborate and communicate with other people, their peers in the industry. And the content is then synchronized across all of their laptops and all of their devices as well. So you now have a group set of people on all of their devices as well.
So you now have a group set of people working on a particular production piece. But as we also talked about is as people become much more open in terms of how they create. They need to start thinking about who they're going to collaborate with earlier in the process, even though they may not know them. And the idea of benefiting from a global community has been one that's been very appealing to a lot of the creatives that we see. So we connect our creative apps all the way through to Behance, that creative community that Shantanu was talking with millions of creative active creatives on there at this point.
We also let them then aggregate all of their finished work into online portfolios. So as the community develops, they get to build and personalized their own brand within the community, and they get to start to build their reputation and start to actually seek career advances beyond what they where they are right now. And then finally, we make it easy for them to actually publish their work. They can published their work as a personal website or they can publish their work directly to app stores. And that really Makes the Creative Cloud.
Now one other very important thing is that all of these pieces today are underperforming in terms of how they actually meet the needs of accretive, but they're also very disconnected. And by having it all come together in a single place where you can actually manage everything that you need, all of your content, all of your relationships and all of the discussion threads that are going on in a single unified place is creative. This is a big, big opportunity for them to streamline their entire workflow. And so this is what makes up the Creative Cloud, the applications, the settings and assets across devices, the collaboration, the community, all the online portfolio and the published work. Now when we launched Creative Cloud a year ago, one of the things that we said we were going to do is not wait a year or 24 months to innovate.
We were going to release innovation on a regular basis. And since then, we've literally released hundreds of features, new tools and service all of them combined. Lightroom, we added a couple of months after we launched Creative Cloud. Digital Publishing Single Edition was introduced a few months later. We acquired Behance and we enabled all of that to work directly with the Creative cloud as well.
So all of the customers got some of the paid Behance services as part of their membership. Apple released the retina by Macintosh. We updated Photoshop and Premiere and all of these tools to benefit from that right away. So there were a lot of benefits that members got throughout the course of the year. And as Shantanu mentioned, this is now our top customer satisfaction product.
We track customer satisfaction and all of our products have relatively high customer satisfaction. Photoshop has always been at the top of that Creative Cloud is now the top customer satisfaction product we have. And one of the top reasons is the access to all of the innovation over the course of the year. So today, we had a series of announcements with the CC apps, obviously hundreds of features across these apps. Productivity all in terms of the productivity, responsive content for mobile devices.
The Photoshop workflow with Reflow was a great example of that, but we also have improvements and new capabilities in a number of our other tools, including Muse and some of the new tools we've announced over the last few weeks sorry, last few months. And then a lot of that Adobe magic things like shake reduction and a a few other features like the Refine Edge that we showed this morning, things that really make a big difference in terms of the end product and the quality. But the big thing that we did today was we also announced that all of these apps are deeply connected into the core services so that our customers are able to stay connected across all of the devices, whether it's their device or someone else's. They're able to collaborate more effectively, efficiently, not just by going to a website, directly and deeply back into the tool and the way they use the tool. And of course, they're able to leverage that community that I talked about earlier.
So that's the evolution of where we've gone over the last year. The other thing though that I think is very important for us to understand is that this evolution is one that's been planfully growing the market opportunity growing the serviceable market for us. So we started last year by focusing on creative individuals. And we created we serviced Creative Cloud a year ago with access to all of these applications, 20 gigs of storage and a host of great services like Digital Publishing Suite, the Behance Pro site more recently, Typekit, on GapBuild, a number of these services that the creators want to use. And we made it primarily available through adobe.com with a monthly or annual offering.
Now this was a big first step for us, but it was limited in terms of scope because not all of our customers transact on adobe Recently, we launched Creative Cloud for Teams and this becomes a large market expansion opportunity for us. We give members everything that you get with the individual service, but we also give them 100 gigs of storage, central deployment additional support and also the ability to leverage the reseller in the relationships so that the reseller can actually administer their content and their access to the applications. And if they so choose, that's an optional feature that some customers are taking. This is also available on adobe.com and we're seeing some of our customers move and select adobe.com, But it's also a way to start to engage the channel in selling the benefits of Creative Cloud to this SMB market and also departments within enterprises. And last, we announced the availability within enterprises.
And last, we announced the availability of recently announced the availability of Creative Cloud for Enterprises. This is all of the CC apps that I talked about today. But in addition to it, we have integration with our digital publishing suite for enterprises, AEM in particular for content management and of course a number of our other marketing cloud capabilities. This is one that we're at the early stages in terms of those integrations, but they very powerful integrations that really set us apart from any other player in the marketing space or the creative space. And this is going to be available primarily through our direct sales force, but also through corporate resellers.
And in effect, it's a replacement or an evolution of the old ETLA or Enterprise Term Agreements that we used to have in market. As Shantanu mentioned, a couple of big business announcements today. The first is that All future innovation in RCC applications will come through Creative Cloud and you need to be a Creative Cloud member to receive those and that we have no future plans to rev updates on the old perpetual creative suite products. We'll continue to sell and support the CS6 product because we believe some customers will continue to choose to purchase that way in the short term and Mark will share how we're thinking about that transition with all of you. The key thing to note here is that as we've gone through this process, the customer satisfaction has been something we've been watching very closely, especially as we make this move in the business model.
The thing that's going to matter most is how quickly we innovate, how high quality is of the products we release are and how effectively our customers start to advocate for us on behalf of this. And that's something that we're working very hard to do simply by releasing these products on a regular basis and just giving them delighting them with the features we're adding. Now we think also that this move to focus our efforts and innovate faster with Creative Cloud as the only delivery model is going to accelerate the transitioned of Creative Cloud. And we've already indicated, given you guidance for the year and Mark will talk about that. But all of the things that we're doing now have been part of our plan for some time.
And that's what's going to drive the growth in the back half of the year and the acceleration that you see here. So with that, Mark, maybe you can talk a little bit more about that. Thanks, David, and thank you all for coming out today. So what I wanted to What I wanted to start with Back up the slide, sorry guys. There we go.
What I wanted to start with was just the inter quarter update that David mentioned. So we put out a press release smiling, which I'm sure you all saw. Just to show you that the quarter, Q2 is on track. The year is also on track, all relative to the guidance that we provided back in March on our earnings call. And as David mentioned, these announcements have been planned for some time.
So these announcements contemplated in that guidance. And I'll talk more about how this relates to the longer term guidance as I move forward. So in terms of the Creative Cloud opportunity, David and Shantanu both this morning and this afternoon discussed the strategy and our new customer offerings. From my perspective as the CFO of the company, this is really extremely exciting. If you step back 18 months, 2 years ago, we laid out this strategy for you.
A year ago, we shipped the product. We recently passed 500,000 subscribers that are paying us. We're making incredible progress and all our focus is now going to go towards Creative cloud. It's very clarifying for us as a company from an investment perspective and it also makes for a much clearer transition to the subscription offering. So our end goal from my perspective of faster revenue growth for this business and more recurring revenue is now even clearer than it was before.
And these announcements today really reinforce that. Convinced today really reinforce that. We've been, I think, very transparent with you in terms of this transition for the past year. But I know there are some things I can probably tell from this room that every one of you has asked just a few more tidbits of information. So I'm going to slowly reveal a little bit more to help you with your models.
I think there are 3 things that I'll walk through right now that will help you understand the opportunity that Shantanu mentioned just a bit more. The first is our total potential market or TPM. This is the total universe of people who we can market Creative Cloud to. The second I'll take you through is the mix of creative product family revenue that we have today by these same user types. And then lastly, the big one that I know you're all holding your breath for is the current creative product family install base units straight that there is a very large opportunity just to migrate the installed base that we have to Creative Cloud, not to mentioned bringing in new users, which we fully expect to do.
So first, TPM. We've shown you TPM in the past. In 2010 back in 2010, the creative professional market we estimated was about 6,700,000 people. And today, we estimate that that's about 8,000,000 creative professionals. Creative professionals, we define as designers, web pros, professional photographers, videographers.
And based on the data from the Bureau of Labor of Statistics and all the international equivalents, we estimate that that market is now about 8,000,000 professionals. In the past, it included print designers and web designers in an intermediate category called interactive designers and we've kind of combined them all now into designers to cover all of those disciplines. These numbers exclude piracy. All of our numbers exclude piracy. It's about a 7% CAGR from the $6,700,000 estimate that we gave you back in 2010.
And that growth really comes from Population expansion, employment expansion and it is weighted towards emerging markets. But this is a TPM calculation. It's not a 100 in the addressable market. In fact, there's a high growth of creative professionals in emerging markets where the price point for our creative suite products was a barrier to entry. And there's an anticipation from our part that the subscription model now with a much lower price point will attract some of these users where our old model would not have attracted them.
So that's the first group. We also target Creative Cloud at a core market of creative professionals, but beyond that, the opportunity is much bigger. So in 2010, we revealed 3 other categories that we target. The first is AtWork creatives. So these are people that have marketing roles in small and medium businesses.
These are knowledge workers in the enterprise. They're people that have been trained on creative tools. And we continue to estimate that there are 10 +1000000 people. It's an opportunity to target in this category, and we continue to be aggressive at targeting these At Work creatives as well as the professionals. 2nd category is at work, at home individuals.
So these are recreational creatives. These are photographers and hobbyists. This is you've heard us talk about the halo effect before. This is the halo effect around the creative professional market. We don't size the market, but it represents a material part of our business and you'll see that in the next section.
And then the last piece, one of our most important vertical markets is the education space. This is faculty, it's administration, It's students grades 6 through 12 and higher education. This is a very important category for the creative products. In fact in any given year it can represent as much as half of the units that we ship. Students licensed through individual licenses in special education pricing.
In educational institutions, we'll utilize enterprise license agreements, as David mentioned, Which are now migrating, as you know, to enterprise term based license agreements, and we take that revenue ratably. There are tens of millions of potential seats in this category and we continue to be very aggressive in this space as it is a very important vertical market. And you'll see from the revenue mix how that maps out. So this is 2012 revenue roughly, bridging from these last two slides showing the total potential market. This shows the 2012 Creative product family revenue broken out by the different categories.
This mix does change year to year, but this is fairly representative. If you look at the 8,000,000 creative professionals that I talked about, it's about 40% say of 2012 revenue. So that's a very big piece of course. But there are tens of millions, as I said, of potential education buyers and you can see the importance of the education space. It's about a quarter of our revenue.
And like I said, it could be as much as half of our units in any given year. And it's also important to note, as I mentioned, that while the CreativePro is our key target market, the halo effect is significant. So you can see the at work, at home people can represent as much as a third of the business from a revenue perspective. So TPM and a representation of how the revenue breaks out some of those user type categories. And then the slide you've all been waiting for, the installed base.
So we took a stab at our Q1 FY2013 install base. By the way, these slides are on the website, so you don't need to write down every number. These numbers, by the way, exclude, they do not include The 500,000 people that the 500,000 plus people that are signed up for Creative Cloud today. So they're not in these numbers. But high level quick observations, there are plenty of customers since CS3 and this does not show CS1 and CS2 because we would view those at this point as new users coming back in.
So this is just CS3, which is 2,007 and beyond. And you can see that CS3 to CS5, we have 4,300,000 people on suites. That's a significant opportunity in and of yourself to move people from CS3 through CS5.5 over to Creative Cloud. There's another 4,000,000 people on CS6 suites. These are users that recently bought in the past year or so.
They may not migrate right away, but they're clearly going to migrate within the next couple of years. So you've got 8,000,000 people in the Suite category alone that we can migrate over. Then on the point product side, there's another 4,000,000 people on point products. Those 4,000,000 people, they may buy point products, But if they buy a couple of point products, they're most likely going to buy the full suite on Creative Cloud. So you've got 12000000, 13000000 people here to get to the 4000000 people that we talked about trying to target in 2015.
Obviously a significant opportunity just to get to those 4,000,000 but an opportunity to get well beyond the $4,000,000 that we targeted in 2015. Okay. So given that opportunity, let me build on what David had to say and break out how they come down across each of the different categories. If you look at the mix, about half of the installed base are individual users And half are volume purchasers and we've been telling you this for quite some time. The new news here for you is that within that volume piece, About 35% would be team people that are buying for teams and about 15% would be people buying for the enterprise.
So that's relatively new news for you. For Creative Cloud, you know the price points for individuals at full price $49.99 a month, Teams full price $69.99 a month and of course we have promotions going on at any point in time. We haven't historically shared pricing for the enterprise because we don't want to compete against ourselves in the enterprise. Just moving from perpetual over to creative cloud. It's simply the number of individuals and teams that we have at any point in time times the average revenue per user per month times 12.
And then for the enterprise, the ARR is just the 1st year of their ETLA. So as David said, some significant announcements today, all our innovation, all our R and D dollars can now be focused on Creative Cloud. We have no plans for new releases of the perpetual license products. And this transition to subscription only, like we said, has always been our plan, and it is reflected in both the 2013 guidance and the longer term guidance. Our progress with the product and our momentum with customers has really reinforced that this is the right move to make and it's the right time to do it.
We spent an incredible amount of time thinking this through. Customers, as David said, can still buy CS6 perpetual and they can buy support for CS6 perpetual. So perpetual revenue will exist for some time and I'll show you what that might look like in a rough idea in a minute. But a lot of you have been asking me how are we going to hit subscriber goals. How do we get to the 1,250,000 this year when the ramp accelerates in the back half?
How are we going to get to 4,000,000 subscribers 2015. This is a big piece of that. We continue to innovate in the cloud. We continue to show them why this is a much better offering. And I think you saw that today.
And at the same time, we show them that we're not going to be innovating in the perpetual product. And we think that really is now the push people will need to move over to Creative Cloud. So as I said, 4,000,000 Creative Cloud subscribers in 2015. We continue to target that. We think we've got, like I said, a great installed base opportunity that's multiples bigger than the 4,000,000 to drive just the installed base over to that 4,000,000 and that doesn't include obviously new users.
The 4,000,000 again, keep in mind does not include enterprise users. In the 4,000,000 subs, we do not include enterprise. And then you can see the ARR. So we gave you ARR targets for the end of this year. The ARR maps with 14 and 15 along with the subscribers in the move to enterprise ETLAs.
So for the ARR number, it does include enterprise. So again, just to be clear, because there's been some question about this, the 4,000,000 subscriber count does not include enterprise, but the ARR numbers do include The ETLA portion for enterprise. And obviously, the big benefit to this and what gets me excited about in Ustream. Ultimately, David's business will be virtually 100% recurring revenue now with the move away from perpetual. So this is what the transition looks like.
Given the subscriber trend line, we're modeling it something like this and I know this isn't precise, but we can't be that precise. 2013 is still the big transition year. That hasn't changed. We've said that for time. This is the big transition year.
We still expect and we've said this for some time that revenue in David's business in the creative space will grow here. So this is the key transition year. 2014 revenue does grow and you can see that. In 2015, Roughly in 2015 now, we would expect perpetual revenue to be de minimis. It's hard to believe that people would be buying CS6 in 2015.
Revenue accelerates in 2015 2016. A number of you have figured this out, but we said that 2014 through seeing we would have a CAGR in this business of over 15%. We still believe that's true. 2014 is slightly less 2015 2016, it really accelerates because you start to get the stacking effect by recognizing the subscription revenue of all of those subscribers. So the growth really takes off as you get beyond 2014.
So that at a high level is the way we're thinking about this business. The big takeaways from my perspective, really exciting product announcements that David's team made today. It's really clarifying from my perspective that we focus all our investment dollars creative cloud. We focus all our marketing and all our energy around creative cloud. And the transition to subscription from my perspective just gets much, much clearer now.
The customer success has demonstrated, like I said, that it's the right time to do this. And we will ultimately end up with the creative business with a very large business, very fast top line growing business at a very, very high percentage of recurring revenue. So it's really exciting. And with that, the 3 of us will take whatever questions you might have.
We did a press conference just before this day and we said only one question for I don't know whether that's going to be applicable here, right, with the financial community. Okay, fire away.
So there will be a microphone going As a reminder, this is being webcast, so we ask that you use some microphone for your questions. And as Chanda just pointed out, let's try to keep them
Thanks. Jay Pleased, Howard Grumman Securities. Question about your installed base number and your thinking about the adoption of Creative Cloud. If I remember correctly from the last disclosure of the base 2.5 years ago at MAX 2010, I think at that time it looked like it was about $5,600,000 So You've grown by about $2,800,000 over that period or roughly $300,000 a quarter, if all that math is right. How are you thinking about the pace of cloud adoption versus the Creative Suite adoption that you've seen on average per quarter over the last 2 or 3 years.
And do you expect that the majority or large majority of adoption will in fact come from the base versus new users?
Well, I think, Jay, if I understand the question as it relates to what we see in terms of the adoption of the subscription, we still think that the installed base is a great opportunity for us to get onto the Creative Cloud. We said that we ship around 3,000,000 units. If you looked at the numbers there, they were higher than that because they included the maintenance as well as the upgrade plan. And so I think our primary focus is let's make sure as all of the innovation that David talked about first, let's continue to get that. We've talked about new customer also adoption being more successful with the Creative Cloud.
And none of these numbers also talk about piracy. So clearly targeting our distinct customer base, people who are accustomed to doing business with us, showing them the innovation that exists. We want to get them to move to the cloud, continue to attract customers. And as you really have more features like David alluded to, which are completely cloud based features, we have a better chance of combating piracy than we ever have
Hi, guys. Ken Wong from Citi. You guys mentioned you guys have 13,000,000 in your installed base and then by to your 15, you guys are going to have 4,000,000 subs. What do you think happens to that 9,000,000 kind of other guys in between now and then? I mean, is it for 3 years just not going to upgrade, they're all going to buy CS6.
How should we be thinking about that?
Well, clearly, we think at Adobe that the right long term solution is the subscription offering in the Creative Cloud. And we just don't have as much experience with the Creative Cloud right now in terms of the adoption. I think today's announcements. It will take some time for people to digest it. But clearly, we would like everybody who's been a user of CS3 on words to move to the Creative Cloud to be able to attract all of those new customers as well.
But what we I think try to do is give you how we are modeling the business right now and we'll continue to give updates as we're transparent after the announcements of today. But certainly we expect or we would like to see all of those just seeing installed base move to the Creative Cloud. In the interim, what do they do, right, for those who haven't moved to Creative Cloud. CS6 will continue to operate, whether it's an existing CS6 customer or the prior versions will continue to do it. And I think it's incumbent on us as we continue to delight them with all of the new features and we are clear about Creative Cloud being the only option by which they can get access to the innovation.
I think we'll see them continue to adopt Creative Cloud.
I I think the other takeaway from that data that would be relevant is that as Chaitanya pointed out, we'll see how that migration transpires. But the bigger takeaway in my mind is that $4,000,000 isn't the top, right? There is upside to that in the out years as well and there is a lot more.
Peter Goldmacher, Cowen and Company. David, what do you perceive to be the number one barrier to adoption For people's unwillingness or reluctance to move to Creative Cloud.
So I think that there is a What we see when we see people move over, they're doing it for all of the innovation that they're getting on a regular basis. We see it because they're embracing seeing the new concepts and creativity around cloud and around all of the community and collaboration features that we've been adding. They're doing it because they've migrated over already to digital as their primary creative outlet. Customers that are still very print focused and frankly where existing products are sufficient for their needs. But as we all know that the macro trend here is going to be more toward dynamic digital content and those customers will also come over time provided that we to execute, we innovate and we do everything we can to continue to just surprise them on the upside in terms of the capabilities.
I think, Peter, the lack of knowledge of the Creative Cloud and the capabilities of the Creative Cloud so far has been the reason why people have not moved. I think our strategy that we laid out was first to introduced to Creative Cloud and to actually demonstrate innovation on the cloud. I think David's slide, when you look at it and think about how much innovation we've delivered over the last 12 months. It was really important to us to set the bid that this was not about a new business model. This was about a new way to innovate.
And I think all of the new customers who use the cloud, they just look at it and say it's the most natural way to do business with us and why hasn't it always been this case. I think there are people who have resistance to the change and I think it's incumbent on us again through the innovation and through the education to really explain to them why this is the best way for them to create. Yes. So the question was around how do we get the message out to the rest of you know the non 5,000 people who attended, as soon as this conference is over, David will be going on the road and I don't know when I'll see him again. No, but that is it.
I mean, I think we have to have very personal conversations with a broad set of our customers. So first, we intentionally put up the URL there. Obviously, 5,000 people saw larger population that will watch it over the coming weeks months. We expect to have a very active conversation on social, but also in person. We are we have 40 cities planned in the next few weeks that we're going to send evangelists to those events in some cases are north of 1,000 people who come in attendance.
This is a big change We have to recognize that and appreciate that. But the way we get through that, as Shanu said, is innovation. And the way we get through that is dialogue. And That's what we're going to do. You said some of it too would be viral at some point, right?
The more people that use it and more the words going to get out. That happened at suites as well. Yes.
And I would say one other thing, Peter. This time, we actually briefed less people on the changes to the cloud than we did in normal releases. I think you will see us unleash all of our marketing efforts right now in terms of describing all of the benefits of this. So the fits of this. So the fact that you haven't seen it till now is more a reflection of what we wanted to do today and have that conversation with them today.
Starting today in all seriousness, through every medium possible, I think you're going to have people talk about all of the benefits. Fit. What does it mean? How do you migrate? How do you translate?
And all of that information is available to all of our customers starting today.
Thanks. Kirk Materne with Evercore.
I guess when you guys think about the educational markets, 50% or so of units, can you just talk about some of the challenges That you think might arise as people have to get out of their habits of buying software traditionally in that market. It's perhaps a little bit more indoctrinated in that market. And what are you David, I think you referred to it that we could talk to you about and things like that. But to really have 50% of your users move over, there to be frankly a pretty seamless process, so you don't get caught up having conversation after conversation about the same thing with all these customers are out there. And I guess When you think about the 4,000,000 subs, do you assume that the educational market will be trailing the traditional sort of enterprise market or individual market?
Can you just talk about how mix shakes out in the numbers you think Maybe
I'll start and then feel free to add. First, with respect to the 500,000 creative subscriptions that we already have had. We've actually seen considerable success in the education market. So I would not actually could jump to the conclusion that away to do business. And so we've already seen a significant amount of success in the education market.
Yes. And I think when we talk education, we really need look
at it in 2 segments, right? There's the individuals and the students and teachers that are purchasing. And to Shantanu's point, these students today are used to renting things, right? Renting services that the subscription model is very is not foreign to them. So we've seen certain pickup there's certainly some pickup and good adoption there at this point.
The other half of the education market is institutional purchases. So large institutions purchasing on behalf of faculty or on behalf of faculty and students. And what we found there as we've started to roll out these the new ideas around Creative Cloud for Enterprise the future of ETLA is that the education institutional purchasers are very receptive to that model. Joined. So we feel pretty good about the education market in particular.
May I have 3 questions quickly or just one? First, if you look at the trends that's happening from a software distribution perspective, App Stores are playing a major role. With the next release of Apple OS, the only way they will allow I don't know if it's really true, but the rumors are is the applications have to be purchased through an app store. That's the reason Microsoft is trying to put the Office on an app store. And same is on the Windows platform also.
App Store becomes the prime distribution mechanism. So in a way, now you are 1 step beyond the customer touch point. How do you plan to address that? If I can answer ask 2 quick questions. 2nd is your presentation was very wonderful today.
It emphasized a lot on creative people, But it also deemphasized the developer community, you open sourced Flex. And I think you have another product, which is called ColdFusion, which is really not in your strategic direction. Do you think open sourcing is just like giving away instead of open sourcing, you can sell it to so many companies around which will help you gain some money. And one last question is your cloud product running on Amazon EC2. There are 2 opposing views.
1 is from Zynga and other is from Netflix. Zynga said after certain size, We have to move away from EC2 and create our own data centers. Netflix says completely opposite, we will always remain on EC2. I suppose you become wickedly successful in this offering, say 5 years, 10 years down the road. Do you think being on Amazon EC2
So let me address the first one. I think we're in a very good positioned with respect to electronic software distribution. And I think there will be multiple channels for electronic software distribution. I think the experienced that you saw today that we delivered in terms of being able to have a download experience from in this particular case the Adobe store and to be able to install it. It's easily translatable when we decide to do it with other app stores.
So I think we're very well positioned. I wouldn't just look at the app stores that you're referring to, whether it's the Apple or the Windows App Store. I think Amazon is also going to be in that particular market with respect to electronic software distribution. And so we view that as a channel as well. So we don't think we've already distributed on products like Photoshop Elements through the App Stores.
Certainly, the Creative Cloud desktop application is going to be available through the Mac App store as well as through the Android and iOS stores. So we're very well aware of what's going on with app stores and I think we will react as appropriate. I think on the second one, we the internal architecture of how we deliver this stuff, I think we continue to use Amazon where appropriate and where it's relevant. I think they've demonstrated very significant innovation in this space. And I think we understand what parts of that we need to control ourselves.
As you also know with the Marketing Cloud, we have significant presence with respect to distribution of software and distribution and services. So I think we will continue to monitor it, but I think Amazon on provide some incredible services today that we leverage. And the 3rd question was associated yes, well that was on. Yes. 3rd question is about development.
Yes. And I think that's actually a good point, good opportunity to illustrate a change that's happening in content creation. It used to be that individuals in our creative professional base really focused on silos. I was either a photographer Or I was a videographer or I was a web developer or I was a graphic designer. One thing that's changing, especially with the new mediums and the convergence that we're seeing in content creation is that we're seeing a convergence of these bases.
And if you look at Creative Cloud, one of the reasons people are excited is because the ongoing innovation. The other reason is that people are looking at this and saying, I have all of this, everything Adobe has to offer, I can start experimenting and we're starting to see that convergence. That's no different for interactive developers, people who do front end development. They were using Flash. They're now using Flash and some of our Edge tools and technologies.
Hi, Brad Zelnick with Macquarie. Mark, just as we try to reconcile our models with the new information that's been presented today. If I look at how I've built up to my creative revenue estimates for here. We're still expecting over $1,000,000,000 from the perpetual product without any incremental innovation. I know CS6, it's been a fantastic release.
But is that reasonable? And can you then answer that in the context of what does the ETLA business look like ASPs and the assumptions that we should expect there. What are the assumptions in your model as we
go out through the remainder
of the year?
So we do think that's still reasonable. We still think people will buy CS6. And we said I said that for some time, people will still want to buy CS6. So again, this was baked into our guidance as we did our model for this year. We knew we were going to go down this path, and That's assumed in the numbers that we did.
From an ETLA perspective, I said that enterprise is about 15% of the mix. So that gives you some flavor as to how big enterprise can be. It's not all ETLA today, but that will quickly migrate more and more over to ETLA. And you saw that in the last couple of quarters, we started talking about more and more ETLA business. So we fully expect enterprise to still be 15%, mainly ETLA oriented.
The price point on the ETLAs, it depends on the volume, and that's why we don't disclose a price for that business. If you're doing a very, very large deal, it's going to be potentially lower than an individual price.
What about your ASP assumption for
Well, we said that we were in the high $37 ish range right now in in terms of the ARPU for individual and team kind of combined. And we said that, that would change as the mix changes. Thanks.
And just one quick one on the installed base slide. Is it also reasonable to assume that 15% of the installed base
Well, we didn't break that out. And as we've built more licensing saying schemes. We have not shared what the exact unit of the installed base is with the enterprise. Right.
Thank you.
Mark, on that topic, I'll ask a question.
There was a slide,
I just like because I know I'm going to get questions about this and it comes maybe follows Brandon's question.
I missed that point when I did my presentation. Shantanu just touched on it in Q and A. But if you add up
CS6, You'll see
that it's more than 3,000,000 units for point and suites. And if you think about the fact that CS6 has been out about a year, we've always said we ship on average 3,000,000 units a year. You say why is it higher than 3,000,000? It's because of upgrade and maintenance plan. So as enterprises upgrade and move over, That shows up in the units.
So that's why it looks bigger than the 3,000,000 that we ship on average in a year.
Do you have any other questions, Mike?
I have a bunch, but I'll.
He's just trying to save himself work later.
Hi, it's Jason Ader from Wells. A question about piracy and unsanction usage and love to maybe just get some comments from you on what you think maybe domestically here in the U. S. And then also internationally, what this move can mean for that opportunity to monetize sort of
Yes. The normal data that we give for piracy is typically built off what the BSA, the Business Software Alliance does. And I would say there are probably 3 kinds of piracy that we see. I mean, there's a hardcore piracy that we see in in emerging markets. I think China and India, you can say 90% plus piracy that exists.
I think there's what we call casual piracy, which is you might have 5 or 6 creatives in a particular group and they buy one piece of offhand and they are using the same piece of software at different times. And then there's respect to what we have in enterprises and that's where the contract to get a certain amount of licenses and then since we've distributed that software, there's a true up provisioned. It's not piracy, but it's a way for us to true up. In the U. S, the estimate is something like 20% piracy.
So the numbers are fairly meaningful. I think this is a next step honestly in addressing piracy as it relates to synchronization of all of the things that we talked about. But I think the real next step and we showed a glimpse of that in a couple of features is where it's actually having Photoshop running on the cloud and the files going to the cloud in order to do like the de blur feature or the shake reduction feature and that just cannot be pirated. So I think all of this is an infrastructure that we're setting in place to address all of those different kinds of piracy. And as it relates to the enterprise, since they all now have IDs with us, we know exactly how much usage, we know exactly how many downloads has So, I think we've really got the infrastructure in place to address that in a meaningful way.
But I think there's one more step that we need to do with respect to showing more of those cloud only features that I think will be the tipping point.
So the follow-up then would When you talk about accelerating growth in 2014 to 2016, do you assume a fairly hefty level of, call it, recapture Within those numbers or what's the what's sort of the underlying assumptions around that?
The underlying assumptions associated with the numbers are Not including any of the piracy. So the piracy is actually upside over and above that. Right. I was
just wondering like these are the opportunities and businesses you are in today. I was at the ACM transactions meeting last week, and they were talking a lot about data science and data modeling and visualization. I was wondering, have you put some thoughts? Of course, it's very nascent, but that is the area which Microsoft is not paying attention to, Neither is Google. Do you think you have the broad tools, but just you need to put some people on the ground on that?
What is your current thinking on like discovery of data and visualization and modeling? That's all.
Well, what we have with the Marketing Cloud and what we announced at the recent Marketing Summit was that this project that's code named Tartan is all about being able to visualize all of the marketing data that people are collecting on behalf of companies. The first is visualization through this project, TARTON. And for those of you who haven't seen, it's all delivered through really intuitive user interfaces on Ipads and other tablet devices. So you can make all of your marketing data actionable. The second thing we've actually invested a fair amount in is in predictive algorithms to do what we call the last millisecond in the Marketing Cloud.
So I would say that we focus on both visualization and predictive a lot more in the marketing cloud offerings. And I think those are coming to market. And clearly, they're resonating with marketers because suddenly all of that data at the back in is becoming not only visible, but actionable. Ann, Mark and I like to talk about the Monday morning meetings that we have. We've completely transformed how we run the company.
We used to run the company looking at data that was a lot more about actuals to date. And now increasingly we're looking at all of the data with respect to what is the funnel, how much is the traffic and therefore what do we predict that business will be. And I think we're not alone. I think every company is going to have to look at trends as it relates to marketing traffic in order to get a better sense for the business, but that's really more the opportunity for the Marketing Cloud than in the creative space.
One for Mark and then a follow-up for Shantanu and David. So for Mark, before this today, you had already disclosed that you would be discontinuing Shrink-wrap software,
which
would presumably save you a few tens of 1,000,000 a year in those costs. As the perpetual business decays, however long that takes. Is there some guidance you can give in terms of what that might mean for sales and marketing expense Or how you might reinvest those related savings back into the new business. And then lastly, Again, Prashantanu and David at the Salt Lake Conference a couple of months ago, it was pretty obvious that you were increasingly on a path of connecting the two sides of the business, digital Media and digital marketing. Does anything you announced today influence the timeline or nature of what you'll be delivering from the other side of the business as you recently tie those 2 halves together.
Sure.
Matthew, do you want to talk?
On the margin side, as it relates to David's business, it's actually interesting because there's a lot of puts and takes or at least there's a few puts and takes. So we're not shipping a box anymore. We're not shipping a CD anymore. From a sales and marketing perspective, as we build up this space, it's clearly going to be easier to market because we'll have in ID and an email address and be able to get to customers directly, which is much, much harder if they buy the box through a channel, let's say, today. So less COGS, if you will, potentially less sales and marketing.
There is more cost as it relates to storage and bandwidth. So there's some offsetting things going on in there. But without a doubt, given where we are today in this transition year. David's margin gets better and better as we move out and as we get more and more subscribers. What that ultimate margin looks like and how that compares to say the peak from where we were under the perpetual model.
It's a little hard to forecast right now because we've got a lot to learn as we go, but Margin definitely continues to get better now.
And Jay, with respect to, I think, the integration between the Marketing Cloud and the Creative Cloud, the sweet spot that we clearly identify that customers resonate with is associated with that digital asset management. And increasingly be fine, everybody telling us that when they see what David has done with the creative clouds having with the creative applications having the creative cloud as a back in. If they don't want that data out there in the public network, they want our marketing cloud solutions to ensure that they have all of those assets in in a private cloud behind the firewall. And so very much the plan of record is to make sure that with CQ Content Management or Web Experience Solution and Digital Asset Management that we can go to an enterprise and say all of your assets, if you want them behind the firewall, here is the complement to the Creative applications in terms of the digital asset management. Most customers are telling us they'll probably have of those assets externally and that's reflected in the Creative Cloud icon and they'll have a lot of those assets internally.
And those as you know are priced separately. Content management for the enterprise. They work in conjunction with the creative applications, but are not part of the creative ETLA.
Just a quick one. I I don't know how
much I'm sure you guys are going
to detail on this, but I guess initially with the Creative Cloud, I guess how much discussion have you had with customers in terms of actually the storage that you're giving them and whether or not that's enough and do you have elasticity in terms of pricing with that because I'd imagine especially people are developing in video and things like that going to blow through 20 gigs pretty quickly. I guess how much of a pushback are you getting on that? And I guess when you think about charging people for storage or including that in your pricing. Obviously, there's a COGS ramifications for you all. I guess, how do you guys think about that?
And where do you think that trend goes over the next
Sure. I mean, personally, I see the cost of storage continuing to decrease. And so we'll always look at that in the context. There's also a given market price for storage today. There are a number of what I'd say sort of flat file seeing options out there with Dropbox and Google, which are really just flat file system options for synchronizing elements.
So what we're doing right now is we give people the 20 gigs and the 100 gigs and it seems like we've hit the right part of the sweet spot given all of those compares, people seem quite happy with it. And we will sell anything above that, we will certainly sell and charge incremental for. That's sort of the way we look at it. It's not something that we're looking to make it as a primary focus of innovation and cost, but we believe that this is a cost that the customers are more than willing to incur and have a recognition of. And I agree with you.
I think especially as video starts to become a more centerpiece of this, that actually represents an opportunity for us. And so just one more thing. And this is you should see this as a way as the way we're looking at the model in the business as a whole, which is we have a lot of value in the core offering. But there are these added services that we believe that we can position and start to address the ASP or the ARPU question that was asked earlier.
Two things I was just going to add was, first, I think until today's applications, it wasn't as seamless as it needs to be in terms of the storage and in synchronization across multiple devices. To your question, we might see an explosive usage of assets now that it's so easy to use and people don't even recognize don't fully understand that it's automatically synchronized across each one of them. Clearly, the benefit to us also is that we think it just makes the more assets they have on our servers, it makes our offering more sticky. And so if we keep innovating on that, we announced at NAB, a video anywhere solution as well, where you can actually have one copy of the video up on a file server and everybody with with application can actually do real time nonlinear editing with these massive files. So I think it's just it's the trick of the iceberg in terms of what we can do once we have those
Thanks. Brad Zelnick again. David, just to follow-up on your keynote this morning, when you announced that CS6 would be the final perpetual version of the product. You made a reference to government and education customers and said that there would be information out later today about helping them Make the move to the cloud or can you just expand on that a little bit?
Sure. This is what Mark and Shantanu were also talking about in terms of the transition of our ETLA. And the way I described it earlier is that we have the CC applications that we're shipping as part of the other offerings, the team in the individual offering will be part of that enterprise ETLA offering. And enterprises will have the choice of whether they want to use at the cloud storage, whether they want to integrate with the DAM and some of the on premise options that we have surprised our government customers that didn't have that had certain restrictions on cloud storage. We didn't want them to feel like they didn't have options.
Any other questions?
I think we'll wrap
it up there. Thanks again for ready for coming to LA and joining us at MAX. As a reminder, your badge gets you into any of the sessions on a space available basis. So if you here, which is pretty exciting. The developers show some of the stuff they're working on in the labs to give you some insight into where we're going.