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Tuesday, 02 March 2010 09:44

Aussie PDF developer prepares to tackle Adobe

Australian PDF software developer Nitro PDF is planning on a combination of a 'freemium' software marketing plan and an expanded channel presence to help it eat into Adobe's dominant market share for PDF creation and management software.

"We're going after Adobe," CEO Sam Chandler told iTWire at the company's San Francisco office, where its headquarters shifted in early 2009. "We're very confident that we can build a big sustainable business here."

While Nitro Pro has been on the market since 2005, sales have grown rapidly since Chandler took over the CEO role in 2007 and began pushing the 'freemium' strategy, which uses free single-purpose downloads and web services to promote its more comprehensive paid offering.

"Revenue had been growing prior to that but because we had been competing with the behemoth that is Adobe, it was very hard to cut through," Chandler said. "But when we started acquiring and launching free PDF software, we found that this traffic could be migrated to Nitro Pro, in much the same way that Acrobat has been marketed by Adobe Reader all this time." Its PDF Download browser extension has been downloaded more than 16 million times.

"We tend to release things in private betas and send a bunch of invitations through well-known and popular blogs," Chandler said. "It's just a really passionate engaged crowd. It's become our model for releasing and marketing."

For the paid Nitro PDF product, staying below Adobe's price point for Acrobat and aiming at mid-sized companies has been the main aim. "Companies with hundreds of employees expect some sort of scale-based volume discount, but won't get a look in from Adobe; they just don't care," Chandler said.

"If you look at what the average enterprise spends on software per seat and put the whole pack against Acrobat -- one product! -- it's about the same as getting the full complement of Office a few bits and pieces. It's really expensive. Adobe's just treaded for so long on a market position that's buffeted by a lack of understanding of alternatives. The level of misunderstanding out there is staggering."

Chandler sees problems in that pricing approach for resellers. "Adobe are actually disliked by system integrators and VARs because they are so inflexible on pricing. What is really compelling for us and the resellers is they can typically make as much money selling something like Nitro at a third of the price in terms of their margin as they could selling Adobe."

The lower price point also makes it feasible for organisations to deploy more seats. "The way in which electronic document usage has developed over the last ten years has actually been a product of what's available at what price point," Chandler said. "Last year we sold a global site licence to Swiss Re and they actually had a deployment of Acrobat over several thousand seats. Nitro's gone in, replaced those and then been deployed to the other 8000 or so users as well."

The recent rash of security issues associated with Acrobat Reader vulnerabilities is one potential roadblock to expansion, Chandler admits. "A lot of people vehemently dislike PDF and you ask them why and they say 'It crashes my web browser and it's clunky and it's hard to update'. There's a whole range of reasons. We have a bit of a PR issue to deal with and it's all of Adobe's making. But it's something we can deal with and I think it comes back to word of mouth."

The channel currently accounts for about 30% of Nitro's total sales, while the Australian market currently represents around 10% of total sales. The company had revenues of $7 million in 2009 and is planning for $14 million in 2010. Long-term, the company is aiming for an IPO, Chandler said.

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