The established creative and document management software company Adobe announced plans earlier this week to acquire collaborative design software company Figma for around $20 billion in cash and stock. ETR released an Early Reaction report the day the deal was announced that can be read in full on the ETR platform HERE. The following article summarizes some key takeaways from that report:
Figma was last valued at $10 billion in June 2021, but Adobe is defending today’s high price tag with a long-term strategy that consumes a rapidly growing competitor. Figma has more than four million customers with its cloud-native design software that is praised by its users for its simple interface and usability. It was a pioneer in web-based collaborative design capabilities. Adobe has been building out a broader suite of productivity, collaboration, and creative tools in recent years, growing Adobe Sign and acquiring the marketing automation tool Marketo in 2018 and the project management platform Workfront in 2020. Figma also has a vibrant developer community that freely shares widgets, plugins, and templates with other designers. There are dozens of widgets and more than 2,000 plugins available to its users. Active and collaborative user communities are difficult to build, and if Adobe continues to nurture this community through the acquisition and beyond, it will serve them well.
ETR has been following the rise of Figma in its Emerging Technology Survey (ETS) since November 2020. In the most recent ETS in August 2022, Figma led the Design subsector with a Net Sentiment of 49% (see Figure 1). MURAL, Canva, and InVision trail in the subsector, with much lower and declining Net Sentiment over recent surveys.
Figma has enjoyed consistent growth in Mind Share, indicating growing pervasion in our survey and suggesting a growing market penetration. Aside from a slight dip in Mind Share in the May 2022 ETS, Figma’s Mind Share has grown steadily since we began tracking the vendor, climbing from its debut of 8% in November 2020, to 15% in November 2021, and now standing at 19% as of August 2022.
Turning more specifically to Adobe’s interaction with Figma in our data, we see in a shared accounts cross-over analysis between TSIS and ETS vendors that Figma is the most natural target for Adobe. Among Adobe respondents with at least 10 shared citations within the Productivity Apps sector, Figma has the highest shared Net Sentiment of 56%, while Miro is further behind at 42% (see Figure 5). In other words, our data shows Figma has been the clearest threat to Adobe for several surveys now, a warning to Adobe that ETR’s Chief Strategist Erik Bradley vocalized in a recent interview “Then there are the design vendors like Figma. This is their third survey in a row where they’re just dominating Net Sentiment overall. And Adobe should probably take note of that because these firms are really coming after Adobe.”
The supporting data for that comment can be found in the illustration below depicting Potential Targets for Adobe, reflecting Net Sentiment and Mind Share for vendors in the ETS Productivity Apps sector with greater than 10 shared citations with Adobe’s Productivity Apps products. (Note: source data here reflects the July 2022 Technology Spending Intentions Survey).
Lastly, in ETR Insights interviews with IT decision makers, Adobe is frequently lamented as a very expensive product. One VP of Technology Services for a large software enterprise remarked that “Adobe’s benefit is, obviously, they got every other product under the sun in their packaged suite, so you’re somewhat beholden to them for other things. And if you have an [enterprise agreement] with them, you get some of the benefits there. But again, that’s at a premium price. It’s an extremely expensive product.” In another interview, a Director of Research and Innovation for a European IT/Telco company said they were “not really satisfied with their pricing models” and thought Adobe was “getting worse and more expensive” as it tries to compete in new product categories. He thinks Adobe needs to “either increase quality, decrease prices, or get away.” Still, he acknowledged the “design and creative people” in his organization remain “addicted to Adobe,” so sticking with the vendor is likely in the long term.
Pending regulatory approvals, Adobe’s acquisition of Figma is expected to close in 2023. ETR Insights will continue to follow the acquisition and track spending trends for the two vendors in the coming months to see the impact of this acquisition on the design software market. In the meantime, log on to the data platform for real-time results for the OCT22 Technology Spending Intentions Survey, or request a free trial to gain access today.
Enterprise Technology Research (ETR) is a technology market research firm that leverages proprietary data from our targeted IT decision maker (ITDM) community to bring you actionable insights about spending intentions and industry trends. Since 2010, we have worked diligently at achieving one goal: eliminating the need for opinions in enterprise research, which are often formed from incomplete, biased, and statistically insignificant data. Our community of ITDMs represents $1+ trillion in annual IT spend and is positioned to provide best-in-class customer/evaluator perspectives. ETR’s proprietary data and insights from this community empower institutional investors, technology companies, and ITDMs to navigate the complex enterprise technology landscape amid an expanding marketplace. Discover what ETR can do for you at ww.etr.ai