What Office 365, Creative Cloud, and Other Software Subscriptions Mean for You

Adobe shocked the creative world by announcing last month that it’s abandoning its Creative Suite in lieu of Creative Cloud subscriptions. Rather than paying thousands of dollars for a complete set of Adobe creative apps, you’ll only pay $50/month for everything they sell. That little change has many Adobe users up in arms, ready to desert Adobe for alternate apps.

But Adobe’s not the only one making a subscription play this year. Microsoft’s now doing the same thing with Office 365, and Autocad, Mathematica, and other major developers have done the same for years. The difference is, Adobe’s making a subscription-only play: individual purchases are no more, and subscription is the only option.

That doesn’t have to be such a bad option, though. Here’s why.

Economics at Play

It's a brave new world for software

It’s a brave new world for software

Think back to the days before the App Store, before we all expected to get full-featured software for less than $10. Go back a bit further, when we purchased software on DVDs, or CDs, or (even further back) on floppies. That’s when Adobe — and Microsoft — got their start in the software business. They made software, burned it onto disks, sold it in boxes in computer stores, then in a year or two made a new version and sold it as an upgrade. Rinse. Repeat.

Now, we expect to be able to download all of our apps on all of our devices, get updates frequently, and want all of it as cheaply as possible. Somehow, a $2,599 suite of software sold in a box set or as a monolithic download doesn’t quite fit that model.

Apple adapted by slashing the prices of its pro apps and putting them in the App Store. Microsoft, even after building their own App Store in Windows, decided to do the same thing Adobe did last year: selling Office in a boxed suite as before, right alongside a new subscription offering. And Adobe, now, a year after rolling out the subscription Creative Cloud, dropped their boxed offerings and went subscription only. They’re still selling CS6, but that’s the old version now, and anything new is going in the subscription versions only.

Subscriptions are nothing new. Microsoft’s corporate customers have bought Software Assurance subscriptions for all of their software for years. Many corporate software licenses have worked off subscriptions for quite some time. But for consumers, we’re used to paying upfront for our software — and increasingly, we’re used to having dirt-cheap upfront prices.

The new model: free apps, plus paid monthly services

The new model: free apps, plus paid monthly services

That’s not bad, per se, but it can be hard to build a sustainable business on $9.99 apps (ask Sparrow). Many service-based apps like Evernote and Dropbox already cost $5-$10/month, as do web apps like, say, Dribbble Pro, App.net, 500px, and more. Others like Byword 2 are selling cheap on the App Store, but adding new features as in-app purchases. Everyone’s having to find some way to make the App Store economics work for them so they can still build a sustainable business.

Adobe and Microsoft are following suite, making their pro tools equally cheap … per month. And hey, if we’ll pay it for web apps and storage, why not for productivity tools?

Apps and More

What’s made the change more confusing is that Adobe and Microsoft have both made their switch to subscriptions sound like they’re switching to web apps. That’s not the case at all. Microsoft does have a nice basic version of Office online, and Adobe has a basic Photoshop photo editor online, but both of those are free. That’s not what Office 365 or Creative Cloud, respectively, are at all. There’s really no reason either of them are using “the cloud” in their branding, except that people are already more willing, apparently, to pay for web apps, and then each subscription gives you included “cloud” storage.

Instead, with both of them, you get the latest versions of the traditional apps you install on your computer, just like you would have before with Office and Creative Suite. Nothing changes there. The only difference is, you’re paying per month rather than all upfront, and you’ll get some extras bundled in for free. Your computer will have to be online at least once every 1-3 months so the apps can verify that your subscription is valid — but then, you’ll likely be online anyhow.

And here’s what you’ll get with each subscription:

Office 365 brings you every Office app available — Word, PowerPoint, Excel, and Outlook on the Mac, with the addition of Access and Publisher on the PC — and lets you install it on up to 5 PCs or Macs. You’ll also get 20Gb of storage in Skydrive (which could possibly keep you from needing to pay for Dropbox Pro), and 60 minutes of Skype calls each month. That’ll cost you $9.99/month.

Creative Cloud brings you every single Adobe app (so essentially the same as Master Collection) for up to 2 Macs or PCs. You’ll also get a Typekit Portfolio plan (worth $49/yr), which will also let you download extra fonts to your desktop soon (which I’m terribly excited about). Creative Cloud gives you a Behance Prosite (worth $99/yr), 20Gb of cloud storage for your creative files, and more. All of that, for $49.99/month.

Is it a Bad Deal?

You get everything. Literally.

You get everything. Literally.

Now, the prices will feel different to everyone. Office 365 is perhaps the simplest, since it’s rather cheap to begin with, and if you need to use Office on 5 computers anyhow it works out very cheap. Compared to the boxed Office options — which now only allow you to install a purchased copy of Office on one Mac or PC per purchase — it definitely makes more sense if you need Office. You could question whether you absolutely need Office today, but for it’s one of those suites that most people are rather required to use.

Creative Cloud is a bit different. First, $50/month is expensive, but several thousand dollars upfront for Creative Suite was even more expensive — at least at first. If you’re just getting started with Adobe’s apps, you’ll find the new pricing much more manageable. It’s existing users who’re complaining, since upgrades did often work out cheaper. Plus, many of us got started with cheaper initial purchases of Creative Suite with education discounts, then cheaply upgraded from there.

Price of Creative Suite and Photoshop CC over time, versus Master Collection or Photoshop + upgrade price over time

Price of Creative Suite and Photoshop CC over time, versus Master Collection or Photoshop + upgrade price over time

If you run the math from starting from scratch with Master Collection and Creative Cloud, Creative Cloud will continue to work out cheaper for over 25 years if you’d have purchased upgrades anyhow. If you’d have purchased one of the cheaper suites such as Design Standard, though, Creative Cloud will start costing more per year after 4-5 years. Throw in the extras like Typekit, though, and you might find it makes more sense.

Right now, there’s a number of discounts available, and if you own CS6, you can upgrade to Creative Cloud for just $19.99/month, or $29.99/month if you owned an older Creative Suite. That pricing is just for the first year, but it definitely makes switching cheaper. And, it’s tough to say if they’ll have discounts going forward, but it’s at least possible. And don’t forget: you’ve got every Adobe app, not just the ones in the suite you used to buy.

There’s also one other option: single app subscriptions, which run from $9.99-$19.99/month. If you only need Photoshop, that’s the way to go.

Why Switch?

Now everyone has a cloud.

Now everyone has a cloud.

At the end of the day, the pricing for Microsoft and Adobe’s subscriptions either works out better, or only slightly worse over time. They’ve both thrown in extras to sweeten the deal, and made subscriptions at least a bit more generous in licensing.

If you would have upgraded to the latest Creative Suite anyhow, there’s no reason to avoid Creative Cloud. You’re just paying each month instead of upfront. Adobe’s already added new features to their Creative Cloud apps over the past year (such as CSS export in Photoshop), and they’ve got a slew of upgrades coming in a couple weeks with the new CC launch. There’s no reason to think Adobe will stop innovating on their apps now; if anything, they’re doing more with this release than they did in CS6. It just takes a change of mindset for us as consumers, one that’d perhaps be a bit easier if the pricing was more in our favor.

But again: the new pricing is far, far better for people just getting started. It’s those of us who already put our bet with Adobe that are finding the new pricing tough to swallow, since we were used to upgrade pricing. If you were waiting on buying Photoshop since it was so expensive upfront, now it’s much easier to justify getting it.

The End of Pirates?

Among the oddest and greatest complaints about Creative Cloud is that people won’t be able to pirate Photoshop anymore. Numerous professionals have written posts about how they got started using pirated Photoshop as a kid, and how that got them their current jobs using licensed Adobe apps (one of many examples here). They theorize that Creative Cloud will make it harder to pirate Photoshop and other Adobe tools, and thus will lead to less people learning how to use it professionally, leading to the end of Photoshop’s ubiquity.

Right. First off, odds are Photoshop and other Adobe apps will still be cracked and pirated. That’s not endorsing it, it’s simply a fact. Even with Creative Cloud, you’ll still have to download and install the apps, as already mentioned. That’s the same way Photoshop works today, and chances are that if the current version (which already phones home to make sure its valid every so often) can be cracked, then the Creative Cloud version will be crackable.

Then, if anything, Creative Cloud makes Photoshop and other Adobe apps more affordable to students and others on tight incomes. Anyone now can use Photoshop itself, now, for $19.99/month (and students can get full Creative Cloud for $19.99/month). That’s a far cry more affordable than paying $700 upfront. There’s also Adobe’s own Photoshop Elements for $79 — and yes, a one-time payment for a perpetual license — which is one of the best alternates to full Photoshop since it works so much like its full-featured sibling.

So don’t worry. I’d tend to say that Photoshop has the same odds of staying the industry leader — and choice of pirates, for better or worse — despite the move to Creative Cloud. And the very same goes for Microsoft Office — though if anything, Office is more threatened by alternate apps these days than Adobe’s apps have ever been.

The Subscription Decision

Should you subscribe to Creative Cloud, or Office 365? Really, the decision is the same one you’ve made every time you’ve purchased a Creative Cloud or Microsoft Office upgrade. You’ll have to weigh the new features, see if they’re worth it for you, then decide to either stick with what you have or upgrade.

If you would have upgraded to the latest Creative Suite anyhow, there’s no reason to avoid Creative Cloud.

Office 365, of course, isn’t quite the compelling option for Mac users yet since it’s still stuck on Office 2011. If you need to buy Office today, then it’s a great deal since you’ll get the next version of Office when it’s released. Otherwise, you’d be best to hold off until the next version of Office for Mac is released, and then subscribe if you want to upgrade.

Creative Cloud, on the other hand, has already added new features to CS6, and is a worthy upgrade even before the new CC suite apps are released on June 17th. If you would have upgraded to CS7 anyhow, you might as well take advantage of the upgrade offers right now and give Creative Cloud a shot.

Either way, the switch to subscriptions shouldn’t be the biggest news about both of these suites. In Creative Cloud’s case, at least, it’s a better deal for most users, and it makes using Adobe’s pro apps much more approachable for those getting started.

And in an odd twist, Office 365 and Creative Cloud both make it easier for PC users to switch to the Mac. It used to be that Office and Creative Suite were the most expensive PC apps people would need to re-buy if they switched to the Mac. Now, both Office 365 and CC give you PC and Mac versions of the apps in your subscription, so it’ll cost PC users nothing to switch — or to add a Mac to their PC workflow. That’s a pretty nice extra in itself.

But should you be scared of subscriptions? Only if you’re scared of paying for software. It really, in the end, won’t work out much different than buying software and then paying for upgrades. And you might just get some nice extras with it, too.