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weewood
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Why does Adobe update the Creative Cloud?

Apr 27, 2013 11:10 AM

Why does Adobe update the Creative Cloud and not to software I purchased to the same level?

 
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  • Currently Being Moderated
    Apr 27, 2013 1:23 PM   in reply to weewood

    I was at the Photoshop Users conference in Florida last week, and they answered that question. It has to do with how the each U.S. state taxes your purchases. When you buy the boxed product, it's a stand alone, physical item and is taxed according to how the software works at that point. When you add new features, it's no longer the same product you purchased, so some sort of method would have to applied to collect further taxes when you download updates that add features, not just bug fixes.

     

    See also: FASB revenue recognition GAAP

     

    Then there's the Creative Cloud version. You're buying an electronic delivery of purchased goods, not a "fixed product", per se. You are taxed on the amount (where taxes are collected) of the sale, not the specific item. So the taxes collected for each monthly update to your Cloud service covers any features Adobe adds to any of their products by way of taxing the cloud service, not the specific items.

     
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  • JJMack
    6,045 posts
    Jan 9, 2006
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    Apr 27, 2013 12:23 PM   in reply to Kurt Lang

    Sounds like a line Adobe would use.  After all Adobe warrantee just state their products should work substantially like documented. Adobe doesn't have to fix bugs for their product are working in accordance to the warrantee that came with them.  You know catch 22. There is no such thing as an Adobe bug....

     
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  • Currently Being Moderated
    Apr 27, 2013 1:08 PM   in reply to JJMack

    No, not a line, it's the weird and sometimes completely baffling tax laws the government uses.

     

    Take for instance (in Minnesota), photography. If you send all of your final images to your client electronically (FTP or similar), then nothing is taxable. If you put those exact same images on any type of physical media (flash drive, CD, DVD, etc.) then the entire shoot is taxable. What sense does that make? None, but that's the way it currently works.

     

    Same thing going on here. Creative Cloud is the electronically sent product and you are taxed on that monthly service; not Photoshop, InDesign, or any of the other software titles.

     

    The boxed product falls under physical media, and becomes taxable as a whole. Any additions change what you bought on disk and are subject to further tax. There isn't any good way for Adobe to handle that mess. You'd get a notice that that there were updates available, but would be subject to local tax before you could download them. How would you define the taxable amount? On the perceived value of the additional features? Would you be taxed on the entire full or upgrade version boxed price again?

     
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  • JJMack
    6,045 posts
    Jan 9, 2006
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    Apr 27, 2013 6:52 PM   in reply to Kurt Lang

    Not interested in the creative cloud or new features Adobe should fix Photoshop bugs and make it reliable like it was in versions prior to CS4. The tax man should have no bearing there. 

     

    However as of CS4 Adobe just want to add features or change Photoshop so they can say look at what we have added and improved.  When I look I see features that use to work are now broken new features that are not so great and changes that make you change you established work-flow because features no longer work the same.  CS6 the buggiest version of Photoshop ever released.

     

    To tell you the truth I don't want the additional bugs that  are introduced into the cloud at any given moment or have features removed or added. What I would like is a stable Photoshop for the 18 month where bugs are fixed till the next stable release of Photoshop 18 month later like the release prior to CS4. Photoshop seems to be on its down hill path....

     
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  • Currently Being Moderated
    Apr 27, 2013 9:17 PM   in reply to Kurt Lang

    @Kurt,

     

    Excuse me? That is pretty much hogwash. Now, I don't mean to shoot the messenger, so please forgive me. If that really is Adobe's rationale, how do they explain all the electronic deliveries wherein the perpetual product is downloaded? No different than a cloud installation under that "reason."

     

    The real reason has to do with creating a state of envy between cloud and perpetual licensees. The hope that perpetual licensees will switch to the cloud.

     

    It's nonsense. And even if there is a state or two where this would actually be true, it won't be for cloud services once these states figure it out. Then what? Does anyone then think perpetual licensees will see new feature updates? Nah. It's not going to happen.

     

    Mike

     
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  • Currently Being Moderated
    Apr 27, 2013 10:48 PM   in reply to MW Design

    US financial accounting regulations (GAAP for revenue recognition) are one genuine reason for this practice

    http://prodesigntools.com/why-creative-cloud-gets-exclusive-features.h tml

     

    The marketing reason (product envy) is another - and the most obvious reason to the outside observer and end user.

     
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  • Currently Being Moderated
    Apr 28, 2013 11:55 AM   in reply to JJMack

    To tell you the truth I don't want the additional bugs that  are introduced into the cloud at any given moment or have features removed or added.

    The Cloud versions don't force updates on you any more than the boxed version does. If you don't want to apply the available updates, you don't have to.

    Excuse me? That is pretty much hogwash. Now, I don't mean to shoot the messenger

    And I am just the messenger. Not necessarily even a good one. I was mostly comparing the strange tax laws to the real photography laws in MN. The Adobe rep in Florida did explain the government rules behind it, but I couldn't remember the arcane term she used. The following line in my post above was added by the hosts:

     

    See also: FASB revenue recognition GAAP

     

    To the best of my recollection, that is what the Adobe rep mentioned. If you look up that phrase, the top return in Google is a PDF file explaining how it works. Good luck understanding it even if you're a CPA.

     

    John Waller has added another link on that revenue law.

     
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  • Currently Being Moderated
    Apr 28, 2013 9:44 PM   in reply to Kurt Lang

    Kurt Lang wrote:

     

    See also: FASB revenue recognition GAAP

     

    To the best of my recollection, that is what the Adobe rep mentioned. If you look up that phrase, the top return in Google is a PDF file explaining how it works. Good luck understanding it even if you're a CPA.

     

    John Waller has added another link on that revenue law.

     

    To be clear, the accounting issue called GAAP for revenue recognition states that the way Adobe counts R&D and development costs are applied to a specific product version for that version's lifetime. So, all of the Photoshop CS6 perpetual license development cost are applied against the revenue produced by that specific version. Adobe is allowed to add bug fixes and maintenance updates, but no new features for the life of that version. And, yes, this sucks for several reasons not the least of which is that the engineers are forced to try to shove as much new stuff into the most recent version and any updates that can be done prior to the end of the quarter in which a version ships because after that date, new features can't be added.

     

    Generally accepted accounting procedures pretty much force Adobe into this accounting. Yes, there are other accounting methods that would mitigate this, and the subscription license is one such option. Since the subscription revenue os an ongoing stream, Adobe can add new features as functionality to subscription users. Unfortunately, the users of a perperual license can not get those new features and functionality, only new bug fixes.

     

    The bottom line is that sucscription users get the added advantage of getting new features and functionality while perperual license users do not. Yep...kinda sucks, but it is, what it is and it's not really Adobe's fault...the accounting regulations I believe actually came into enforcement because of the whole Enron scandle...

     

    I realize this sort of explanation is akin to talking about sausage making...nobody really want to know how sausage is made, they just want to eat it. Same deal with Photoshop users...nobody really want to know how Adobe has to do their accounting, but the realities dictate what Adobe can and can't do...

     

    BTW, this all has zero to do with state sales tax...although there my be state to state differences on whether a state charges tax for software. But that has zero to do with Photoshop development.

     
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  • Currently Being Moderated
    May 1, 2013 6:32 AM   in reply to Jeff Schewe

    That makes way more sense than we non CPA types trying to read up on FASB revenue recognition GAAP. Thanks for the info.

     
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