There seems to be a constant panic among Final Cut Studio users that Apple is “going to abandon professional video” because it isn’t the first thing that Apple talks about at every press conference or event. But it shouldn’t be. Pro Apps are a relatively small – but highly profitable – division within Apple. True the focus is on iOS devices, which turns out to be a great thing for professional video because that’s likely where the next (and desperately needed by Final Cut Studio and Apple’s other QuickTime-based apps) version of QuickTime is coming from.
I guess it’s human nature to need constant reassurance that a decision to spend (a very small sum of money in the context of doing business) on a particular piece of software was the right decision. It’s ultimately what’s behind all the Final Cut Pro vs Media Composer arguments that pointlessly fill the Internets. It’s my strongly held belief that Apple intent to grow the Pro Apps and there is likely a release coming this year.
A company that is certain to release another version this year – as they have pretty much every year recently – Avid, should be where the concern over the future of a product is focused. Avid hasn’t turned a profit in a very long time. A very long time. While the company has the resources to weather that for a finite amount of time, no company can continue to lose money without consequences.
For example, Avid will be cutting jobs and closing facilities in the first half of this year. This follows layoffs of 200 in 1999, 129 people in 2007, and 410 people (15%) in 2008/09. Like Apple Avid is a diversified company so not all these folks were working on Media Composer, but when you put it in context that Apple reportedly (in a never confirmed Tweet) layed off 40 people in Feb 2010. Avid lays off more than 500 people in 2007-2008 and plans to lay off more in 2010 – all officially confirmed – and it barely raised a whisper. Apple is rumored to lay off 40 people in Pro Apps and it’s suddenly a huge disaster. It isn’t logical.
Avid faces a finite future. If they do not continue to turn the company around they will ultimately have to sell or wind up the company. In a Dec 15 article Broadcast Engineering started an article on Avid with:
Avid, once a dominant player in video editing systems, has tried virtually everything within its power to right what is seemingly a listing ship. With competition coming from a number of Macintosh and PC-based vendors, who offer less expensive NLE products based on off-the-shelf technology, Avid has tried to follow suite but has not been as successful.
I think that’s excessively harsh. Avid has made great strides turning around a company heavily dependent on expensive hardware that continued to be too expensive too long, into one that is more like its competitors, with software that doesn’t require hardware and, where it does, uses more commodity hardware. (The Matrox Mini/Media Composer 5 hook up is just the beginning. Once the current hardware’s R&D costs have been amortized, look for Avid to support more general hardware options, probably even from AJA where they partner for DS hardware.)
That’s a difficult journey for a company like Avid. They have to replace high margin products with lower margin products while still funding the company and investing where they need to invest. The current management team is doing everything they need to do, and should be doing, to make the change successful, but it’s in no way guaranteed, and the cash on hand is finite. They still have sufficient funds for several more years of operation, but it should be noted that the largest “assets” are intangible. Intangible assets rapidly become worthless or worth much less in a stressed sale.
In the last three years Avid have laid off more people than are likely on the Pro Apps team at Apple, and they get a pass? Can anyone explain why?
The Broadcast Engineering article (above) finishes on a positive note I’d like to reflect:
The management team that includes Greenfield, Kirk Arnold, executive vice president and COO, and Chris Gahagan, senior vice president of products, seems to have its hands full. When the new team was brought in, there was speculation that the purpose was to clean up the company in preparation of a sale of its assets to some other company. That prospect seems less likely today, but one never knows for sure.
[Update] Avid president/CEO Gary Greenfield clarified that Avid’s current restructuring is focused on re-allocating resources in a changing company. As they should be.