Photoshop is around $600-700 for the full product, $200 for an upgrade. That means that the full product plus one upgrade is approximately equivalent to two years of subscription -- which is the amount of time Adobe is planning to go through two versions anyway. After that point, owning plus upgrading is cheaper, but it seems likely that by that time Adobe will have tweaked the subscription and upgrade prices to make owning less appealing.

The people they are really going after are those that need to swap Adobe files (e.g. creative consultants and their clients): Inter-version compatibility is a headache for any participants who aren't on the latest version. Things could get particularly ugly if they start releasing features to subscribers that aren't otherwise available until the next version.

Most professionals/companies already have a copy of Photoshop so they are competing with upgrade pricing more than full retail pricing. Upgrade pricing is set so low because most users don't need the latest version anyway. (It's still 200$ to upgrade from CS2 to CS5).

Edit: You can also upgrade student editions to full retail versions, so "having a copy" includes the student edition.

PS: For most non professional people a 400$ copy of CS3 is plenty. Next year they can probably upgrade to CS7 (for 200$) and then stay on a 2-3 year upgrade cycle after that.

> Photoshop is around $600-700 for the full product

Or something like $1500 if you happen to be European. This is roughly as fair and balanced as FOX News.

Or Australian. If Photoshop was $500-$600 AUD I would probably buy a license. For $1.5k I could buy a new computer instead and continue to use free tools.

Yup, there are a large number of people who need to do graphic design only on occasion and therefore can't justify the cost of a full license.

For example, I would probably pay a few thousand dollars for a license that allowed Photoshop to be installed on a dozen workstations, but can only be running for one user at a time.

At least around here, if you're not a full time designer you get GIMP not Photoshop. Adobe's leaving money on the table.

They rely on not-full time designers using pirated Photoshop.

It does depend on the type of business--for most it seems to make more sense to just buy.

But the example given--Photoshop--retails for $699. So that's more like 20 months to break even.