The Evolution Of Design In 2021: Learning From Design Vendors
I’ve been out on paternity leave and needed to catch up. Design is changing rapidly, so I thought I would give a peek into my reading and analysis of recent results and announcements:
More and more companies are investing in design and adopting new tools to design with. One sign is the interest in new(er) design vendors.
Among insights-focused vendors:
- UserTesting filed for an IPO and announced it grew 47% in Q3 2021.
- Amplitude, a product analytics company that helps companies improve design, grew 66% in its latest quarter.
- As a comparison, feedback-oriented vendors also grew. Qualtrics grew 41% in Q3 2021; Medallia and Momentive (formerly SurveyMonkey) were closer to 20%.
Among creation-focused vendors:
- Adobe, the biggest player in design, says Creative Cloud grew 21% to $9.8 billion annualized recurring revenue — slower than previous quarters, but it says seasonality, not competition or slowing demand, is the cause.
- Unity, a company focused on creating and operating 3D content, grew 43% to $286 million.
- Canva, an Australian startup focused on visual design, raised money at a $40 billion valuation and says it “expects to exceed $1 billion in annualized revenue by the end of 2021.” The company previously said it more than doubled between 2020 and 2021.
- According to sources, Figma, a visual collaboration and design company, “expects annual recurring revenue to more than double this year from $75 million.”
For some context, Autodesk reported revenue growth of 16% to a little over $1 billion, giving a comparison between growth rates in physical design versus digital design.
Some industries and types of companies have moved more quickly into design.
- Our data indicates that 73% of companies are still at the beginning stages of design. Amplitude says that only 26 of the Fortune 100 are its customers. My read is that many of the biggest companies have not embraced new methods of gathering data about experiences and designing better, which shows that there’s more change coming.
- UserTesting reports its top industries are tech, financial services, and retail in its S-1. This mirrors the most common industries in our experience design provider research. Expect other industries to begin using these new tools and approaches.
The US seems to drive much of the current design investment, especially among newer vendors.
- More than 80% of UserTesting revenue is in the US, and 64% of Amplitude’s is in the US. By comparison, Adobe revenue (not just Creative Cloud) for the Americas combined is 57%. Autodesk’s is about 40% Americas. This continues a theme from Softbank’s huge investment in Contentsquare — there’s a big digital design opportunity outside the US.
The design market is big. (I’ve written about this before.)
- We calculate current spending for all design tools at $35 billion in 2020, and I’ve explained why this number differs from the vendor-provided estimates.
- UserTesting says it’s in a $41 billion market. This has some overlap with Amplitude’s claimed $37 billion market.
- These compare to $31 billion from Adobe Creative Cloud, $60 billion for Qualtrics (which also overlaps with UserTesting), and $52 billion from Autodesk (about half of which the company calls “design”).
Expect more changes to the competitive landscape.
- Adobe has responded to new Creative Cloud competition with a major emphasis on enabling collaboration, including: 1) $2.8 billion on two collaboration acquisitions, 2) more browser-based usage that eases participation from infrequent users, and 3) the announcement of Spaces and Canvas. All of these are aimed at underscoring the enterprisewide value of Adobe. My colleague David Truog addresses Spaces and Canvas here in more detail, but I see both as a clever move to visually illustrate how much of the design process the company can support and attempt to solve the fragmentation issue with so many software-as-a-service platforms identified in Design For Work: Boost Productivity And Satisfaction By Transforming Enterprise UX. As one designer told us: “Why the [expletive] do I have calls on a Google Calendar, where people are following me on Figma as I show my work, and then a project manager is writing notes on the meeting in Google docs, which they put in Asana, and then sends the link to the client via Slack?” Adobe isn’t alone. InVision recently released a “State Of Visual Collaboration” report and has its Freehand visual collaboration product; Figma formally released it’s FigJam whiteboarding product for collaboration.
- When it comes to designing digital interactions, Adobe’s massive MAX creativity conference featured approximately 1 minute of its 90-minute keynote on Adobe XD. By comparison, Adobe spent 10 times as long on 3D and immersive in that keynote. Workflows for digital interaction design are supported by fast-growing companies like Amplitude (insights) and Figma (visual collaboration and design). Adobe covered design systems in its keynote through the “Creative System” concept and its Creative Libraries feature, but with minimal mention of design systems. Alternately, Figma hosted a design systems conference in addition to its Config events. Adobe appears to be taking the “creativity road” across all of design and not focusing as specifically on interaction design and digital product design.
- Acquisitions continue (as we said they would): Analytics company Contentsquare acquired Hotjar, adding a potential product-led growth lever and a more entry-level offering. Customer service vendor Zendesk announced plans to acquire Momentive (formerly SurveyMonkey), representing a different kind of competitor from the contact center that’s hoping to integrate more insight tools. Unity just announced it will acquire effects studio Weta Digital’s 3D tools as demand for 3D assets ramps up from augmented reality, virtual reality, and metaverse applications.
What does all this data say? Design’s rapid growth continues, but we’re still in the early stages. Other Forrester data shows that companies still underinvest in design. Like I’ve said before, if you care about making products, services, and experiences better for people, all this investment is great news.
The greatest changes will come to 1) visual collaboration, 2) accessibility and inclusion, 3) design for digital interactions, 4) AI’s relationship with design, and 5) using and creating 3D assets. Digital design is likely to grow faster outside the US, but the same design tools and practices won’t work without adjusting for local usage patterns and cultural norms. I, for one, can’t wait to see what happens next!
Have questions? Thoughts? Get in touch!