Adobe Launches PDF Creation Tools for iOS

Adobe (NASDAQ:ADBE) launched a PDF creation application – Adobe CreatePDF – for all iOS devices by Apple (NASDAQ:AAPL). The app will be compatible with the iPod Touch, the iPhone and the iPad. It allows users to convert almost all standard documents (doc, xls, ppt), images (jpg, bmp, png, gif) and text (rtf, txt) to PDF, which is the most popular document format in the world. The Acrobat division comprises about 15% of the Trefis price estimate for Adobe and the company competes primarily with Microsoft (NASDAQ:MSFT) in the document space.

We currently have a $35 Trefis price estimate for Adobe, which implies a 40% upside to the current market price.

Tapping Opportunity with iOS

There have been a lot of PDF reader apps on the iOS App Store but only a few which allow you to actually create PDF documents on iOS devices. Apple had sold close to 160 million iOS devices in April 2011, and we expect the total iOS user base to be around 200 million by now. ^[1]

Adobe has priced the CreatePDF app on iOS at $9.99, which is cheaper than its offerings on other platforms, but significantly higher than the average iOS app.

Considering the significant demand for a PDF creation app by iOS users, we expect the application could sell around 40 million copies on the iOS platform, assuming that even 20% of iOS users buy it.

Accounting for Apple’s 30% cut, that would mean an increase in revenues of close to $280 million dollars which is a 36% increase from the current revenues of about $750 million from the Acrobat division. Acrobat could be Adobe’s next billion dollar division after Photoshop & Creative Software. The average price of PDF creation tools by Adobe would definitely come down significantly, but it will be more than compensated by the increase in sales.

Check out our complete price analysis of Adobe

1. 160 Million iOS Devices Sold So Far, Social Times, April 2011 [↩]