Adobe is a monopoly in the Multimedia Software Industry: But It is Still Keeping up with the Industry

Is Adobe a Monopoly?

We could question if Adobe is a monopoly. Yes, there are competitors to Adobe, but at the professional level, Adobe dominates the industry. Similar to how Google dominates web searches, 64% of web searches are done on Google and 33.1% are done on Bing and Yahoo combined.  Yes, Google has competition, but it maintains a solid hold on searches similar to how Adobe maintains a solid hold on the multimedia/creativity software industry.

At this point, Adobe is its own worst enemy. They even state this in their 2016 Form 10-K as a Risk Factor. "If we cannot continue to develop, market and offer new products and service or enhancements to existing products and services that meet customer requirements, our operating results could suffer." If they can't compete with themselves, their product will become stagnant. It's the old tortoise and the hare race, if the hare slows down too much, they will be passed by the tortoise. 

Look at the share price the last 5 years, you'll notice a nice consistent stream of increase in share price. No multimedia/creativity software businesses have the capabilities of Adobe to compete, so adobe has enjoyed regular growth with few interruptions. 

One of the contributors to this rise in share price is the $1.77 billion in quarterly revenue share in their 2017 Q2 Investor Earnings Report. This is a record in quarterly revenue, nearly $400M more than their Q2 in 2016. $1.21 billion of that comes from Digital Media, which contains their flagship, Adobe Creative suit'es reoccurring revenue. 

These trending graphs can give us a pretty good indicator that Adobe's revenue will continue with consistent growth while there is little software competition to disrupt their reigning market cap over the multimedia and creative software.

We will see whether Adobe can maintain its monopolistic status in the multimedia software industry.