FCP X Six Months Later – Blog Post

[Herb Sevush]

[Craig Seeman] “It’s certainly not profitable for Avid.”

Are you saying you’ve seen Avid’s financials and the software division is broken out separately and is not profitable?

Herb Sevush
Zebra Productions
—————————
nothin’ attached to nothin’
“Deciding the spine is the process of editing” F. Bieberkopf

[Craig Seeman]

[Mark Morache] “I think there is more than a little fear that Apple without Steve Jobs may be the end of it for the pro market.”

[Mark Morache] “Obviously the consumer side has thrown this model out of balance. If anyone can afford to keep it’s pro market fed, even if it’s not as profitable as the consumer side, it would be Apple. “

Actually the consumer side will result in a re-balance IMHO. Apple is learning what works and will apply that to their entire product line. That’s why I’ve brought up commodification (not the same as consumerization). It may well mean Jobs’ desire for simplicity will have “won.” We see it in FCPX and we will see it in what replaces the MacPro. Devices and CPUs, and the software they use to sell them, will be “self contained” hubs that can be expanded externally.

BTW if you’ve seen the rumors about Gannett buying thousands of iPhones and iPads for journalists, might give you an indicator as to where some “Pro” markets are heading.

[Craig Seeman]

[Herb Sevush] “Are you saying you’ve seen Avid’s financials and the software division is broken out separately and is not profitable?”

Avid is a hardware company. That’s where the bulk of their revenue comes from. I’ve seen at least one recent analyst report that says their FCPX crossgrade discount hurt them further. Avid itself is not profitable nor is the current revenue from MC able to help them all that much.. With their current business model they need to sell Unity and Isis to make money and the market for those is small and not expanding. There are many articles going over the financials. I’ve posted some already in other threads.

[Herb Sevush]

Craig –

You are missing my point.

Yes Avid is loosing money and yes Avid makes most of their money from hardware sales and yes Avid’s business model does not seem to be currently sustainable.

But no, you have given no evidence to show that MC software is losing money “by itself” and there is no evidence to show that if MC was broken off from the parent company that it wouldn’t financially succeed on it’s own merits. Avid’s problems and MC software profitability are not the same, specifically because Avid is a hardware company, anymore than FCP profitability and Apple’s profitability are highly linked, and for the same reason.

Herb Sevush
Zebra Productions
—————————
nothin’ attached to nothin’
“Deciding the spine is the process of editing” F. Bieberkopf

[Chris Harlan]

[Craig Seeman] “BTW if you’ve seen the rumors about Gannett buying thousands of iPhones and iPads for journalists, might give you an indicator as to where some “Pro” markets are heading.”

Huh?

[Craig Seeman]

[Herb Sevush] “But no, you have given no evidence to show that MC software is losing money “by itself” and there is no evidence to show that if MC was broken off from the parent company that it wouldn’t financially succeed on it’s own merits.”

I don’t disagree with you. MC itself or Avid as an entity may be sold to some other company. The question is how does MC fit into Avid’s current business model. How will Avid change its business model to survive and how will that impact products including and especially MC.

Avid has a few options. The one not viable is to maintain the current business model and continue downsizing to cut costs . . . and demoralize remaining employees.

They will either
change their business model, impacting products including MC
file chapter 11 or, worse, file chapter 7
be sold off entirely
be broken down and sold

In any case, a company that’s been downsizing as its most obvious “solution” to its problems is going to impact their product lines.

What is clear, regardless of MC’s revenue to Avid, it can not sustain or otherwise turnaround the company without some other major change to their business.

Apple, also a hardware company, uses software to sell hardware. FCP legacy may not have been driving hardware sales upward beyond a slow steady replacement of MacPros and some MBPs.

Avid does not use MC to drive hardware sales. It did at one time though. It drove the sales of proprietary hardware. It no longer does.

You have to look at the business model a company works under. FCPX is designed to sell hardware (Macs of various types). Whether it succeeds is another story but it has a clear model. MC doesn’t seem to fit in Avid’s hardware business model anymore. Something will change. Change may be painful to some market segment. Unless you think Avid will become a software company driven by MC sales, MC will likely be impacted one way or another.

[Steve Connor]

Perhaps Apple might buy Avid, to recapture some of the “Pro” market 🙂

“My Name is Steve and I’m an FCPX user”

[Chris Harlan]

[Craig Seeman] “In any case, a company that’s been downsizing as its most obvious “solution” to its problems is going to impact their product lines.
“

True enough, and Apple really gained from the experience. No offense, man–there is a certain amount of validity to some of the things you are saying, but you are at quite a distance from whatever is actually going on there, and the frequency with which you keep making these prognostications makes you sound a bit like Ted Waitt opining on the future of Apple.

[Chris Harlan]

[Steve Connor] “Perhaps Apple might buy Avid, to recapture some of the “Pro” market :)”

Yeah, that would Shake things up.

[Herb Sevush]

Craig –

My response has been all about this statement from an earlier post:

“I find it odd that TV and Film is heavily dependent on Avid which apparently hasn’t been able to make money (get out of the red) for five years and counting, with that industry’s heavy dependence. So if TV and Film can’t support the one NLE company they depend on, it would be odd to base a business model primarily on those industries.”

It’s totally misleading. The fact that Avid has made some poor choices does not mean the TV and Film Industry is an insufficient market to support the NLE that services them. Avid’s failures as a company does not justify that statement. So no, I don’t find it odd.

If you want to go back a little in time, Media 100 was a successful and rising company 10 years ago, with a strong NLE product. The company then invested 2 years and a lot of money on a real time compositor called the 844/x. Wrong product, wrong time and the company went bankrupt. Did that mean the Media 100 NLE was not a viable product? Hardly, as it’s rebirth a few years ago by Boris demonstrates.

So I agree with you about the problems Avid has as a company, but I wouldn’t be hesitant to invest my money or my future in MC software. It’s too valuable a property to be left to die, if Avid can’t fix their problems financially then someone else will pick it up.

Herb Sevush
Zebra Productions
—————————
nothin’ attached to nothin’
“Deciding the spine is the process of editing” F. Bieberkopf