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36
STRATEGY

Competing With Adobe
 

In May 2006, we wrote about ARTS PDF, which had decided to start competing against its biggest customer.
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The Problem For years, ARTS PDF developed plug-ins to enhance Adobe's (NASDAQ:ADBE) Acrobat PDF software. By 2003, the Melbourne, Australia-based company had 30 full-time employees and $3 million in revenue, half of which came from Adobe-related projects. But Adobe, which had always encouraged third-party developers, was creating more plug-ins on its own, and ARTS PDF's owners, Karl De Abrew and Sam Chandler, feared their business would disappear. At the same time, they felt they could create a cheaper alternative to Acrobat. In December 2003, ARTS PDF began engineering Nitro PDF. It was a huge risk: If Nitro PDF failed, Adobe probably wouldn't eagerly welcome the company back into the fold. "We bet the farm on Nitro," says De Abrew. Soon, 80 percent of both employees and cash flow went to developing and marketing the new product. Nitro PDF was officially unveiled in April 2005, and the relationship with Adobe quickly cooled.

What the Experts Said All three experts were skeptical of the strategy. Tim Bajarin, president of Creative Strategies, felt that the smaller company couldn't deliver the same service as Adobe. Rita E. Knox, research vice president at Gartner Research, said it would be very challenging to overcome brand loyalty to Adobe. And Dave Dolak, founder of Marketing by Dave Dolak, said the big question was "whether they have the resources to promote Nitro PDF."

What's Happened Since De Abrew says he wants Nitro PDF to become "the standard product to sit alongside Microsoft Office." That remains a dream, but the company has made progress, selling 100,000 copies of Nitro PDF in 2006, for $99 each (compared with $299 and up for Acrobat). Reviews for Nitro PDF have mostly been positive; CNET praised its price and ease of use and recommended it for small businesses and individual users. ARTS PDF's revenue grew to $5 million last year, and a simpler $49 version of Nitro PDF, Nitro PDF Express, came out this spring. The company still makes plug-ins for Acrobat, but 70 percent of revenue comes from Nitro PDF. To reflect this shift, the company officially changed its name to Nitro PDF Software in June.

What's Next The company is focused on capturing a bigger share of the PDF pie, and online marketing will play a major role. De Abrew projects sales of 200,000 units of Nitro PDF Professional and revenue of $6 million this year, and the company plans to add 10 to 12 employees, half of them in sales and marketing. This July, the company celebrated its 10th anniversary. "The success of Nitro PDF totally validates our decision," says De Abrew.

Last updated: Sep 1, 2007




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