Adobe has been pushing the envelope with our software for years. The Photoshop maker was a pioneer in moving its design software to a subscription model, and while the move caused some short-term pain, it ultimately boosted profits and boosted its stock price. rose over the years.
Still, earlier this year, some investors worried that Adobe (NYSE:ADBE) could be a net loss on artificial intelligence, suggesting that free applications from various vendors shouldn’t hurt the company’s sales. I had a suspicion that In fact, the opposite seems to be true. Adobe stands to be the earliest and biggest winner in the AI revolution.
Over the past few weeks, Adobe has made a series of announcements regarding the growth of its portfolio of generative AI software. Outside of Microsoft (MSFT) and Alphabet (GOOGL), Adobe may be the software industry’s most aggressive company to reinvent its business for his AI era.
It shouldn’t come as a surprise to anyone who’s seen Adobe. The company has become a leading provider of creative software and a significant player in marketing and document management tools such as electronic signatures.
in a recent interview BaronsAdobe CEO Shantanu Narayan has argued that generative AI will expand the number of people creating their own content. Instead of hurting Adobe’s business, he said AI will increase interest and usage in Adobe’s creative software applications such as Photoshop, Illustrator and Premiere Pro.
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So far, Adobe has distributed new tools on a new website called Firefly, where users can try out amazing (and easy-to-use) new photo editing tools for free, as well as image-to-image services. It offers. ChatGPT Creator Simple text commands similar to OpenAI’s Dall-e app.
Adobe says users have already created more than 200,000 digital objects on Firefly, and more than 150 million more using the beta version of its new tool for Photoshop. So far, Adobe has distributed these tools to all visitors. But that will soon change and Adobe will be positioned for a more profitable AI future.
Here are some highlights Barons A recent conversation with Narayan, CEO of Adobe since 2007:
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Thoughts on Adobe’s Generative AI:
AI is nothing new to us. This already helps us in our mission to help people express their ideas and to make our products accessible and affordable. The current excitement is clearly about generative AI.
We have always believed that generative AI could serve as a starting point for what people can do with our software. That’s where the magic happens. It helps people achieve what they want faster.
At Adobe we think of this in three layers. First, if you use generative AI, you need to integrate it into your existing products to make your software more effective for your customers.
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Secondly, we are experts in this field, and we are most passionate about it, so we create a basic foundation model. However, our approach is not always the same. As for imaging, I built the model believing that with Firefly I could create a basic foundational model. For text, we thought ChatGPT was already cutting edge, so we decided to leverage that model rather than create our own.
Digital marketing has previously created a model where PDFs can be used to perform a feature called “liquid mode” that allows any PDF to be reused for mobile devices.
The third layer is data. We took a differentiated approach to training our model and used only images from the Adobe Stock Photo Library. The Adobe Stock Photo Library has content under license or in the public domain.
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We concluded that Adobe needs to be accountable not only to itself, but also to the industry, in how people should use their data and who owns the data. rice field.
On how AI compares to other tech trends:
This will be a major inflection point for technology, similar to the move to mobile devices, the cloud, and the emergence of social media.
On the regulatory outlook for artificial intelligence:
This idea that “we will suspend AI” is not true when the rest of the world may not. We need to harness the power of AI while understanding its impact. Regulating AI prematurely would be misguided.
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On Firefly’s early success:
This has been one of our most successful betas, and we expect much more to come. We have an exciting roadmap for co-pilot as an interface. Like the generative fill feature we introduced in the beta of Photoshop, the power comes when Firefly is integrated into each of our creative applications for fonts, vectors, colors, video, and many other things we do. Imagine how it will perform.
Regarding earnings from Firefly and AI tools:
Firefly is a separate service. It’s currently in a free beta version. After general availability, we will continue to offer free services, but will also offer subscription services with higher quality, higher usage limits, and more usage options, as recently announced.
Clients will be able to train their own models with their own content, Coca-Cola or not. Barons. Some companies may want to use their own content to fine-tune the model, but only make the refined model accessible within the company.
On finding ways to make AI commercially safe while protecting intellectual property:
The moment we announced Firefly, we made it clear that it was designed to be commercially secure. Some other models clearly allow for copyright and trademark infringement activities. Firefly can’t do that.
As you can imagine, the interest from media companies and media companies is growing. [consumer-package goods] Enterprises, from other enterprises. They all recognize the power of generative AI, but hope that only they can monetize the power of their data and assets, or get paid for it.
In some cases, users have provided subsets of the data to create custom models. And any individual or knowledge worker in the enterprise can create and market content and campaigns. Why isn’t it as valuable to every knowledge worker in the enterprise as an email or word processing application?
Compensation for Artists Contributing Content to Adobe’s Stock Library:
Feedback on our plan to reward developers for work created from stock images has been incredibly positive. People feel we care about both innovation and community.
Creators appreciate our desire to engage with them to find solutions. Admittedly, there are always people who react negatively to any new technology. However, we are pleasantly surprised by the overwhelmingly positive feedback on what we have done.
On how AI can expand Adobe’s overall addressable market:
We have been very vocal about it. That will create more TAMs. When mobile devices came along, people thought, “Oh my God, how do we create content for mobile devices?” When the web came along, the question was, “Will people create more content?”
And now they are asking the same question about AI. We live in this world where every customer expects everything to be personalized. This suggests an ever increasing amount of content being created.
We say our TAM is $200 billion. Today, our annual revenue is at $20 billion and we already have a huge opportunity. But as AI expands and more people use this technology, our growth will accelerate.
write destination Eric J. Savitz (eric.savitz@barrons.com)
