The present and future of post production business and technology | Philip Hodgetts

Jan/11

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Why are we all worried Apple will abandon Pro Video… [Updated Jan 16]

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.

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9 comments

  • Michael Horton · January 4, 2011 at 6:43 pm

    As usual you give us a sane reminder to stop acting insane during this transition period. If there is anything creative people have in common it is we all have A.D.D, we are quick to judge and all of us are an impatient bunch and want it NOW. And we don’t read enough to form an educated opinion. We parrot what others say. I guess it’s easier.

  • Michael Kammes · January 4, 2011 at 6:49 pm

    As always, thanks for the insight, Philip.

    Apple, as you know, is under the microscope on every move they make. There are more Apple Kool-aid drinkers than Avid Kool-aid drinkers. This makes any Apple move fodder for rumor sites. No avidrumors.com around, is there?

    Also, the percentage is a whole bunch greater on Apple development team than Avid development team.

    If we take at face value – “OMG APPLEZ DUMPED 40 FCP PEEPZ”, well, that’s a much larger percentage of Pro Apps development people than Avid – whose sole purpose is NLE.

    Under the hood, however, we can dig and find about Apple people possibly being re-shuffled for different projects, or Avid possibly restructuring – whether it be for financial reasons or simply streamlining, given the uniting of the 5 ‘brands’. Plus, what if the restructuring is not development people? It’s really difficult to compare layoff numbers as it compares to importance or a companies stability.

    Quite frankly, I am still more worried about Pro Apps future than Avid’s. Media Composer & DS have made more leaps in the past 2 years than FCP has. Plus – Avid is hungry. NLE is WHAT they DO. NLE is what Apple ‘toys’ with.

    As always, that’s my opinion, and I could be wrong.

    ~Michael

    • Admin comment by Philip · January 4, 2011 at 7:10 pm

      I OTOH have no doubts about Apple’s commitment to Pro apps, but do still worry about Avid’s financials. I’ll be happy when they start reaping the benefit of the hard work and start showing positive quarters. How about we start avidrumors.com? We don’t have to know anything, after all that’s how the Apple rumors are done! :)

      Shane, I also don’t want either to go away, nor Premiere, Vegas or Edius. Competition is good for the customer.

  • Shane Ross · January 4, 2011 at 6:57 pm

    Yeah, I knew this, and try to point it out to every person who cries gloom and doom about Apple and the ProApps. I swear, the people who start these rumors of Apple’s impending doom, of it focusing more on iDevices and less on professional gear…are marketting people that work for Avid and/or Adobe. Or staunch users of those platforms that want FCP to fail and fail hard.

    I don’t want FCP to fail…and I certainly don’t want Avid to fail. It has been a blessing and a curse that lower cost NLE’s have hit the market. It shook Avid awake and made them address needed changes to their software, and modernize it to deal with more current formats. And made many of their products more affordable. But it has been a curse that despite that, they are still pretty expensive (their hardware, that in comparison does a lot less then the cheaper hardware available for FCP and Premiere)…and with a small market share, and a lower cost…they are in a deep hole and it will be tough to get out of it.

    They need more market share with this lower cost if they are to survive. And that is what they are striving to get with the more current versions. Making it “more FCP like” to lure people to Avid. To allow lower cost hardware for monitoring, and DVD outputting. I don’t think it is the high priced hardware that is preventing drawing in more users. Very few FCP editors need nor use third party capture cards. And with a student price of $250…opposed to FCP’s $899….it should be a shoe it.

    It is the bundle of software that might be a cause. No higher end color correcting tool. No DVD authoring software except for the Windows only Avid DVD, no graphics program, no audio sweetening program. No suite of tools…like FCP and Premiere have…to make production “all in one.” Avid, IMHO, still markets like it is a link in the chain.

    I do hope it survives. While I do prefer FCP to Avid for personal reasons, I do enjoy working on an Avid, and find that it is superior in so many ways, with many workflows that cause FCP to choke.

  • Juan · January 4, 2011 at 8:50 pm

    “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?”

    Because AVID has no where else to go. The post-production business is their ONLY business. The concern is from people who have invest in a complete apple infrastructure (FCS, FCServer, XSan, XServes, XServe RAIDs or now Promise RAIDs) who see Apple focusing on iOS to the exclusion of everything else.

    No one thinks AVID is focusing on making cellphones to the exclusion of their editing products.

    It’s one thing to have a company fold, it’s another to see a company succeeding somewhere else and ignore the ones that brought them to the dance. Good for Apple, bad for their pro customers.

  • Woody · January 4, 2011 at 9:41 pm

    Just as Avid was slow on the video side to alter their “hardware as a dongle” integration it isn’t until now, with Pro Tools 9, that you can finally use third party hardware. Most of the DAWs have been software only or third party integrated for a very long time.

    In regard to your post’s title – I’m not worried about Apple’s commitment to ALL aspects of digital film-making. (OK, fingers crossed on audio…) But then I typically pay no attention to most Apple press conferences or releases. I read you to sort all that out for me Philip!

  • Marcus R. Moore · January 4, 2011 at 10:00 pm

    Why does Apple talk so much more about iOS than FCS? Because it’s a much larger part of their business, has a much larger audience, and is composed of 4 separate products with 4 different yearly refresh timelines. There is no part of the year when one of these devices isn’t due for an update. It will be all iPad rumours until March, then iPhone until June, then iPod and AppleTV in the Fall. And as consumer products, the signal to noise ratio on them will ALWAYS be greater than a niche software product like FCS.

    I agree with Philip. Apple is being held to a double standard that drives me a bit nuts.

  • Dylan Reeve · January 12, 2011 at 7:52 pm

    I broadly agree with what Philip says, but there are a couple of other things that should perhaps be considered…

    The layoff of 40 “Pro Apps” staff from Apple was worrying for some because that’s clearly staff who work on the very products in question. I have no idea how large the Pro Apps division is, but it’s hard to imagine that the loss of 40 staff from a division that produces essentially 4 products isn’t pretty significant.

    The other factor that plays into the concern about the future of FCS is the slow pace of updates, and most specifically the relatively lack-lustre upgrade in FCS3/FCP7. And possibly also, for some, the seemingly massive amount of work needed to take FCP from where it is now to where it needs to be to continue (64bit, free of Quicktime constraints).

    I don’t think that Apple is about to dump FCP, but it’s certainly started to lag in the last couple of years and it’s very hard to get a read on what might be coming in the future. They’ve also got plenty of history of dumping products when they didn’t want to be bothered with them anymore. Apple is a company that prefers to drive consumer demand, rather than follow it. Those factors certainly make it somewhat easy to imagine the worst.

    As for Avid, they have had a lot of adapting to do, for sure, and some aspects of their business have adapted better than others. I certainly think that Media Composer (and Symphony and News Cutter) have come a really long way recently and the momentum seems likely to continue. They’ve made some really big changes in their business model, and are certainly becoming more appealing to some segments of the NLE market that have ignored them. But they still have practical (hardware) and image (old school crappy software) issues to work through.

    In the time we’re talking about with layoffs at Avid it should also be considered that they’ve acquired a number of other businesses. Pinacle, Sundance, Sibelius, Euphonix and a quite a few others. All of those acquisitions come with staff.

    I think the evidence (large scale development) indicates that the layoffs at Avid have not affected their core NLE business at least.

  • Marcus R. Moore · January 13, 2011 at 8:28 am

    That’s true, Dylan, but I think if there has been one common theme to Philip’s articles over the past year, it’s been that the development of FCP has been tied, and most would say held up, by concurrent development of OSX. Due to it’s underlying QT framework and ties to OSX, FCP could not develop as I’m sure it’s developers wanted it to. Even current rumours point to the fact that a spring release of FCP4 under Snow Leopard won’t have all the functionality of FCP4 under Lion when [barring some development miracle] native nonQT editing and 64 bit architecture finally come to be.

    Yes, Apple has been distracted by iOS, a platform and operating system that didn’t even exist 5 years ago. But while in the short term it may have people worried, in the longer term it may bring unexpected dividends.

    iOS is all about touch, and I’m personally very excited about what that can bring to the editing workflow. The new iPad will very likely have cameras and video, and if so then very likely iMovie. Though I don’t use the program, I’m VERY interested to see how iMovie scales up to that form factor. I’m old enough to have done editing that wasn’t tied to a keyboard, and I have to say that one day I’d like to see custom, touch interfaces for pro apps, that drop the keyboard paradigm.

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