Both Apple and Avid cited the same reasons for taking a pass at this year’s NAB convention, claiming they can spend valuable marketing dollars meeting customers in smaller venues. Avid expected to spend $6 million in Vegas before pulling the plug, averaging just about $60 per attendee.
Taken at face value, the companies’ decisions make sense. Let’s face it. How many of us get any information in the booth that we can’t get online from our hotel rooms? Booth presentations are so tightly scripted that by Wednesday my colleagues and I have most of them memorized. There’s nothing to learn in the booth, and quite often the presenter knows nothing more than the script.
Those offices camouflaged within the giant set pieces throughout the booth are another story. That’s where the suits court the checkbooks. Avid’s booth attracts checkbooks. Last year Avid may not have made any groundbreaking announcements at NAB, but tumbleweeds certainly weren’t drifting through the booth either. Sell a couple of dozen Interplay installs, a hundred or so Unity Isis systems, and, more importantly, get a bunch of qualified leads for large facility installations, and that $6 million isn’t too badly spent.
Is there another reason why Avid opted out?
For Apple, the overwhelming bulk of its sales are $1,300 boxes of software, and while a goodly number of broadcast executives come to kick the tires at the Apple booth, they must driven to distraction by the ironic t-shirt, thick-framed glasses, iPod-toting crowd three deep at every station. The Apple booth at NAB in recent years looks more like the Apple Store on Black Friday than a gathering of broadcasters.
In fact, even Apple’s big Sunday press conference has taken on the personality of a rock concert. Nearly everyone attending NAB can attend the press event. It’s hard not to get invited. The place is loaded with giddy fans. Every announcement is followed by wild applause. Even features that have been in competing products for years are received like the heralding of the invention of the wheel. Don’t get me wrong. The products are worthy, it’s just the crowd often doesn’t understand why. Apple’s wildly profitable. An annual $6 million expenditure on Kool-Aid isn’t likely to get investors complaining.
So why did Apple pull the plug?
The business cases for backing out of NAB
Insiders and the well connected have known for some time that no big announcements had been slated for NAB. Rumors regarding the future of Apple’s ProApps and Avid abound. Word on the street is that Apple has been shopping ProApps around since late last summer, and a deal was close last fall. Now such rumors have reached a fevered pitch, with ProApps apparently sold with all but the final announcement to be made. Potential buyers include Thompson, which has been on an acquisition spree of late, and would love to add an industrial strength NLE to its newsroom offerings.
No one will speak on the record for attribution. Until then anything can happen, but sources say morale in the ProApps group is low. Key members of the team have been moved to consumer-focused products like iMovie. Others have begun preparing for life after Apple.
If this is the case, Apple has little reason to throw a party for ProApps, and lopping a few million from the expense column makes the unit a lot more attractive to a buyer.
Unlike Apple, Avid professional video applications contribute significantly to the bottom line. While NAB is expensive, banner ads on NYTimes.com and TV spots are not a viable alternative. Avid serves the professional market and needs to be where professionals are. Perhaps road shows and smaller venue gatherings will meet Avid’s marketing needs better, but it’s a questionable strategy. Sony, Panasonic, Harris, Quantel, JVC, and Autodesk surely don’t enjoy cutting multi-million dollar checks for trade shows, but none have found a better model. It’s hard to believe Avid has stumbled upon it. Avid’s absence at NAB will look like surrender to key constituencies.
Change is in the air at Avid. The new CEO is a shake ‘em up kind of guy. He has no video industry experience, but he’s got a lot of restructuring experience. Again, yanking $6 million from the marketing budget makes the post production unit more attractive to potential buyers. By NAB 2009 Avid is going to be a very different company. There’s no point in telling a 2008 story. Avid’s customers take a long view. They want a roadmap, and right now the GPS is down in Tewksbury.
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Thanks for posting that, Frank. I agree that the backroom business angle of NAB is underestimated by those who just take booth cost and divide it by number of attendees - and the bigger fish you’re after, the more important that aspect is.
I’m somewhere between alarmed and saddened that Apple ProApps would be sold off to another entity. Of course, Apple tried to do that initially when they bought FCP from Macromedia in an attempt to keep it (and by extension, the desktop video on Mac industry) alive, so I guess it makes sense now, but as of this morning I’m having a hard time thinking of a suitor who could take it over and make everyone happy.
In particular, it’s hard to imagine a big company who would keep Apple’s flair and keep the low-budget videographers/documentary makers who use FCP happy, or a smaller company who could ease the fears of large facilities who are adopting FCP. I’m particularly worried about Motion and futureShake in varying scenarios. The one upside might be unbundling SoundTrack and Motion so Adobe, Avid, etc. customers could buy them as stand-alones.
But that’s just my hand-wringing. We’ll see how it all shakes out! (Absolutely no pun intended…)
Posted by .(JavaScript must be enabled to view this email address) on 02/08 at 09:24 AM
Fascinating analysis.
I’ve had a growing impression—from my own experience and others’—with Final Cut Studio and Aperture, that despite the introduction of certain new features in the ProApps area—and even new acquisitions—there is some kind of shortfall or slowdown happening.
Perhaps what’s behind it is simply the same reason why Apple doesn’t license OS X? That the real deal at Apple is about selling hardware, not software? Maybe from a profit point of view, Apple’s development resources are better spent on Leopard and iLife and iTunes because that’s what sells the most computers.
It may also be that in the post-PowerPC era Apple finds it less critical to continue proving that their “pro” computers can be taken seriously (since any PC-head can clearly compare the specs to available PC hardware) and that the thrust is now more purely about proving that the Mac OS and the “mac way” is better… and that’s really a consumer-oriented marketing message in the end isn’t it?
Might as well leave the whole ProApps headache to someone else, if the survival of the company—or even just the ‘cool’ factor—isn’t really tied to those products any more…
Posted by .(JavaScript must be enabled to view this email address) on 02/08 at 12:15 PM
“For Apple, the overwhelming bulk of its sales are $1,300 boxes of software?
That people are running on ????
Apple sells ProApps because each one needs a box usually running from $2800 to $4500. Add a few more BTO options and monitors and that can from $4000 to $6000 or MORE! Maybe some of the bigger shops are buying Xserves too at $3000 and up.
Apple CONTROLS the whole experience from quality to marketing, by CONTROLLING the SOFTWARE.
Now maybe you’re arguing Apple is going to drop their whole MacPro market along with the Cinema Displays that go with the them. Maybe that’ll impact MacBookPro too.
If they sell the software to somebody else they lose control and it can seriously hurt their desktop sales if FCS is taken in a different direction by another developer.
If they can’t control FCS they risk major upper end hardware losses. Remember FC move accelerated when Avid announced they were stopping Apple support. That’s because Apple didn’t CONTROL Avid. Apple didn’t CONTROL Adobe when Premiere was a crash factory on the Mac.
The only way Apple would sell FCS would be if they were ready to dump out of that end of the hardware market too. Maybe you believe Apple is going to be just an iPod, iPhone, iMac, MacBook company.
Posted by .(JavaScript must be enabled to view this email address) on 02/08 at 04:35 PM
I tend to agree with Craig’s comment. There are a lot of maybe’s and rumors bandied about in this post, and I tend to subscribe to the “extraordinary claims demand extraordinary proof” mantra. I guess we’ll all find out soon enough.
Fortunately FCP Studio runs rather well on current Macs (with the exception of Compressor’s random “unable to connect” issue), so a short hiatus without updates isn’t exactly the death knell for FCS 2. And while I personally don’t wish to go back to PPro, another usable option now exists for Apple users with Adobe’s CS3 Production Suite.
Matt Jeppsen
http://www.FreshDV.com
Posted by Matt Jeppsen on 02/08 at 11:39 PM
It’s inevitable that there will have to be major changes at Avid before they do their final fade to black into the history books of video editing but I’m highly sceptical about the Apple side of things. It’s just not in Apple’s culture to build products up and then sell them off. I’m not aware of any prior examples. Anyone?
Spinning the non-consumer apps off to a wholly owned subsidiary (like the Filemaker Inc situation) might be a possibility but why would they bother? FileMaker Inc branding makes sense for a cross-platform database where the Apple name could be seen as detrimental to suit-wearing Windows users but the advantages of Pro Apps being part of the Apple brand would seem to far outweigh any disadvantages. Ultimately Pro Apps sell Macs, there’s an undeniable link there.
What is for certain is that since the iMac, Apple has finally broken out of their pro user niche of music, video and publishing and become a massively successful consumer company. Does that consumer success naturally lead to dumping all or part of the pro user market where Apple are in a uniquely powerful position? I very much doubt it. Mr Jobs isn’t known for giving up hard won control so easily.
Posted by Martin Baker on 02/09 at 04:01 AM
“Potential buyers include Thompson, which has been on an acquisition spree of late, and would love to add an industrial strength NLE to its newsroom offerings.”
Thomson already did that with their Dec 2005 acquisition of Canopus, including Edius Broadcast. It makes their acquisition of Apple’s ProApps somewhat unlikely ( although not impossible ).
Posted by .(JavaScript must be enabled to view this email address) on 02/09 at 05:57 AM
Gotta say, this post really takes my overall opinion of this site way down. These are seriously unsourced(and wrong) rumors and fear mongering. ProVideo- I thought that was for professional. Not what I’m reading in this sorta junk…
Posted by .(JavaScript must be enabled to view this email address) on 02/09 at 08:26 AM
What about Sony.
They’ve been able to be both a pro- and consumer hardware and software company. They supply components to Apple products and are able to bridge the gap between hardware and software successfully.
They would have to abandon their editing software or adapt it or FCP to it.
Posted by .(JavaScript must be enabled to view this email address) on 02/09 at 08:36 AM
No to forget the announcement of “Final Cut Server” from April 2007 that went into nowhere until now. It had always kept me wondering why this product announcement did not materialize so far. After Frank’s article I am now anticipating why…
Posted by Joachim Polzer on 02/09 at 09:27 AM
>Avid’s booth attracts checkbook
No
Avid will still be at NAB, in hotel suites meeting clients. These deals aren’t made in the booth. The lack of the booth isn’t going to loose a single ISIS, Unity, Interplay sale, they are not impulse purchase!
Posted by .(JavaScript must be enabled to view this email address) on 02/10 at 04:30 PM
This is a little silly. Apple won’t be selling the Pro Apps line.
Posted by Benjamin on 02/11 at 12:15 PM
“Apple announced Aperture 2, the next major release of its photo editing and management software.” http://www.macrumors.com/2008/02/12/apple-releases-aperture-2-0/
I guess this means Apple is going to sell off it’s Pro Apps division…
Just sayin,
BK
Posted by .(JavaScript must be enabled to view this email address) on 02/12 at 08:27 AM
The rumors about Apple selling off the Pro Apps do indeed greatly predate their recent NAB decision.
After the recent ruckus about this, I decided I really had to try to get to the bottom of it. Like many others here, I have a lot invested in Apple’s Pro Apps, and if the road map changed I’d like to know about it sooner rather than later.
Certainly CS3 on the Mac is not a real choice at this time. I don’t think even Adobe believes that, with so many pieces simply not working yet.
And the Final Cut universe would not stop spinning no matter what.
But my conclusion from pursuing 20 years of contacts (I got my first Powerbook at Apple’s employee store) and doing a very thorough washing of every bit of information I could find is clear: the information I had received previously about outside shopping of the Pro Apps was pure FUD, not supported at any level that mattered.
So did Avid “do a Microsoft” to get people to switch to Media Composer out of fear? That seems so totally unlike them, but then again they are caught between a rock (falling high end system prices) and a hard place (higher capabilities of inexpensive systems such as Final Cut Studio).
Thompson already bought their pro NLE, hard to tell if they’re happy, but it doesn’t matter for this discussion.
Apple opened themselves up for pro criticism as the 2006 Mac Pro was getting a bit moldy and the graphics card selection archaic, so the January announcement was in the nick of time.
Soundtrack Pro is laughing stock, but I expect we’ll see a replacement this year.
Details don’t matter. What matters is that Apple is in absolute 100% need to have full control of these pro apps for the sake of significant ongoing software and hardware revenues.
With one million FCP licenses, they have a nice annuity going, and for those who think of Apple as a consumer company: the pro app business gives Apple a lot of “shine” that would be hard to replicate any other way.
Posted by .(JavaScript must be enabled to view this email address) on 02/15 at 09:17 AM
Well that sucks for them. I enjoy going to NAB ever year. I mean i like walking around and i like meeting some of the users. the demos they have i like. was really hoping to talk to ans see somethings from XSI but i guess no softimage this year
Posted by .(JavaScript must be enabled to view this email address) on 02/18 at 10:47 AM
Frank,
Here’s an interesting read as a follow up to your post.
http://www.roughlydrafted.com/2008/02/12/is-apple-shedding-its-final-cut-pro-apps-at-nab/#more-1554
Posted by .(JavaScript must be enabled to view this email address) on 02/18 at 02:39 PM
This is a load of weapons grade bolonium.
Posted by .(JavaScript must be enabled to view this email address) on 03/04 at 04:10 PM
Booth presentations always has nice scripts and it’s good for the viewer.
http://www.homebiz-direct.com
Posted by Jennifer on 06/06 at 02:41 AM