Apple laid off 40 people off their Final Cut division.

[sigamy]

Don't know that I agree with this. The pro apps exist to fuel sales of their semi pro (like the quad iMac) and Pro (MPs) machines.

I agree with your statement but Erik's point is still valid. Apple pushed FCS in order to build an ecosystem around pro Macs and OS X. This was all pre-iPod. Now Apple is earning a much larger percentage of it's revenue from iPhone/iPod and laptops.

They've said for years that most Mac sold are notebooks.

As they move to more of a consumer electronics company we really have to wonder if they need the Pro market and if the cost of developing/supporting Pro apps brings a large enough ROI for Apple.

I wonder if a FileMaker/Claris type spin off of the Pro division would work for both Apple and customers?

 

[Barry_Green]

Keep in mind the 80/20 rule, which says that 80% of your results come from 20% of your efforts, and it takes the remaining 80% of your efforts to contribute that last 20% of your results.

Yes the Pro Apps drove hardware sales of higher-end computers. But ... since the iPod came out, and iTunes, and now the iPhone... how much of their business is high-end MBPs and MPs, and how much hassle is it? With FCS, they have to keep up on every driver, every platform, every new camera, work on compatibility and bugs and constant never-ending development, to serve a comparatively *tiny* user base. With the iPhone, they release a product and thousands and tens of thousands of folks work *for free* to make it better (developing iPhone apps) and not only that, but Apple SELLS their efforts. Those people are working effectively for free, bringing Apple a finished product, and Apple sells it through electronic download for absolutely no effort and pretty much no responsibility on their part, to millions of customers worldwide.

So they have this new business model, which provides unlimited revenue potential, for no effort (selling other people's hard work, whether their music, their movies, or their software)... or the old business model, involving massive effort to build, develop and service incredibly complex computer software which appeals to a comparatively tiny customer base (professional video editors). I don't know what the future of the ProApps is at Apple, but I could certainly easily understand if they are no longer a core focus for the company. Massive effort for comparatively minimal return, versus massive return for comparatively minimal effort -- if I was running Apple, no doubt I'd ditch the whole proApps and professional hardware division entirely and focus on all the "i" products (iPhone, iTunes, iMac). And as there are some pretty smart folks running Apple, I wouldn't be surprised to see them move in this direction.

 

[Tom 4]

After reading all this thread, I would completely agree with Barry and Erik, I began with AVID years ago (Media Suite Pro on a Quadra 950) , after a short period I switched to a windows version of AVID software, The windows version of AVID was much more stable than the Apple version.
I would have no big issues with going back to AVID from my FCS software/hardware.

If everyone had to change as we did from Avid's in those early days to Apple hardware and FCP, it would just be the swing of the pendulum, Most facilities here in OZ have a FCP set-up as well as their favoured edit platform, AVID etc, so finding editors is not a big issue, you can learn a new platform if you have to , it's not rocket science, just the interface takes some getting about, and windows hardware can be as fast as Mac at half the cost, very nice.
Plus, entry level AVID software these days is not over priced, just the thought of it scares people.

I believe the writing was on the wall when apple began using Intel parts.
Maybe this little Gizzmo will change the way we use our software ? we built a windows box that nearly matches the power of my Intel Macpro for half the cost, runs Lep & SL too, is this the future ?.
http://www.expresshd.com/

cheers
Tom K
olinevideo.com.au

 

[Barry_Green]

For those who are interested, here's Apple's most-recent revenue breakdown, published January 25, 2010.
http://images.apple.com/pr/pdf/q110data_sum.pdf

They sold $4.45 billion worth of personal computers, $3.4 billion worth of ipods, and $5.6 billion worth of iPhones. So 2/3 of their hardware revenues come from something other than computers.

They also made $1.1 billion from "other music-related products and services", which I interpret to mean iTunes sales?

As for software, all their software applications all added together, including software, service, and other sales, amounted to $631 million. So when it says "service" does that mean repair services? If so, could we call the entire software sales segment more like, what -- $500m? Wild guess? Doesn't really matter, I guess, because if you put it all in perspective, they made 10x as much from the iPhone as they did from all their software sales added together -- not just the ProApps, but everything, including iLife, iMovie, Snow Leopard, iWork, Quicktime Pro upgrades, MobileMe, everything. So how much of that $500m can be attributed to the ProApps? Let's choose an outrageous number and say "half". Which, if I was to guess, I'd think that's incredibly generous, but still, let's say half. Okay, $250m of software sales... and all the associated expenses and support staff and R&D and development that goes with it all, versus $5.6 billion (22x as much) for the iPhone, or $1.1 billion (4x as much) for just collecting fees for sales at the iTunes store...

ProApps is probably a pretty good business for somebody, it would make sense for it to be spun off, nobody's suggesting it would be shut down(!) but -- is it the tail that wags the dog? No, it doesn't really seem to be much more than a blip on their revenue radar. A wildly exaggerated guess of $250m of revenues, out of a total slate of $15.7 billion... that's 1.6% of their total revenue coming from ProApps (again, wild guess, and I wouldn't be surprised if I'm guessing way high).

So yeah, I could see them selling it off.

I wonder if a FileMaker/Claris type spin off of the Pro division would work for both Apple and customers?

Well, all I can say is look what happened to Vegas after Sony bought it. I think you'll find a fairly unanimous reaction from those of us who used it before Sony's acquisition, and after -- it went downhill after Sony bought it. I think all of us who used it prior to the acquisition really wish that the guys who developed it, still controlled it. When it was the top product in Sonic Foundry's slate, it was serviced incredibly well. After it became part of the megaconglomeration, things aren't better.

So I would think that if the ProApps were the highest priority for whatever company owns them, it could only lead to serving the customer better. When Sonic Foundry owned Vegas, they serviced it and updated it and were the fastest, most responsive, most accessible, just most excellent software company to work with. And Vegas was their #1 priority.

I can't fathom how anyone could think that the ProApps would be Apple's top priority. Maybe once, years ago, but now? With today's revenue landscape? It's plainly obvious that the ProApps can't be a top priority for Apple. But they could be the top priority for somebody! I would like to think that if the ProApps were to be spun off, that whatever company buys them would service them just like Sonic Foundry serviced Vegas.

 

[dcloud]

maybe apple could selll their proapps

 

[Andrew McCarrick]

Is it that easy, what is the cost of an avid system that delivers a complete solution like FCS3? (FCP, compressor, DVDSP, Color are the ones I am concerned with)
Also, does it work with current MBpro & mac pro lines?
I know there is always google, but I appreciate the basic info if you already know about it...

Media Composer is about $2500 (but you're getting the NLE, powerful Color Correction tools, and numerous included additions), software alone. It works fine on the Mac OS and windows xp and vista, unsure about windows 7. That's all you really need for editing anything that has direct importing (P2, SxS, ect.). Mojo DX is about $7500, and has all kinds of Digital inputs and outputs. If you need to digitize anything from an analog source (or want extra external processing power), you'd need a Nitris DX, which is $10,000.

 

[Kegan]

I also agree with Barry that selling the Pro Apps is probably in the cards for them, but what if they do stick with only "i" products (iMac, iPods, iPhones, etc) - what will run the Pro Apps?

Sure the iMac can, but when people invest in a system for strictly editing or using these higher end applications, I don't think the majority buys iMacs (either MBPs or Mac Pros, no?). If that's the case and they don't want other companies to make computers to run their OS (Pystar I think they were called?), what would another company buying the Pro Apps to continue their shelf life do, if you have no good system to run it?

Kegan

 

[ChipThome]

I'll get bold and make the wild azzed prediction Final Cut is finally cut from the stable and we see Final Cut for PCs on the shelf within two years.

 

[adkimery]

If the ProApps become independent of Apple how much do you think the prices will jump up? Apple's ProApp M.O. historically has been to buyout other companies, rebrand their software and drastically reduce the price (DVD SP, Shake, Color, Logic, etc.,), but w/o the hardware sales to subsidize this practice how much do you guys think the prices will go up and how much will that impact Final Cut's place in the industry?

FCP made inroads because it was significantly cheaper than the competition and it was 'good enough' but if someone said, "You can have FCP for $1000 or you can have Avid MC for $1000" I don't think FCP would've stood a snowball's chance in hell back in the day. Even today if the Final Cut Suite's price jumps to the price of CS4 or MC I think they'll be a lot more critical thinking and evaluation going on when it comes to picking and NLE.


-Andrew

 

[Hidef1080]

If the ProApps become independent of Apple how much do you think the prices will jump up? Apple's ProApp M.O. historically has been to buyout other companies, rebrand their software and drastically reduce the price ......


-Andrew

A number of large companies work that way.
Adobe for one with Macromedia's Flash, Dreamweaver, Fireworks ect.
There was not much of a price change... if anything the prices went up.

I'm not an Apple user but I aways wanted to try FC but did NOT want the Apple hardware and there was no way I'd buy into Apple's system just for the editor.
If I had to guess I'd say that based on the number of professionals that do use it, someone/company will buy it and keep it going so I see it as a plus if it means Final Cut would be free to run on Windows based machines.

 

[Yak]

The Sky Is Falling! The Sky Is Falling!
Lets get real 40 people being let go is not the end of the world nor is Apple saving millions of dollars by not showing at NAB or even "MacWorld" mean that they are only interested in iPhones. They have become one of the best managed companies in the world. I have been using Final Cut since 1.5, and have see it grow into the standard editing platform. Could it be better yes, we all know of little things that need work, but I do not think with the advent of a major new device which will display moving images (the iPAD) apple is about to let go of a division that makes the software needed to make the programing which will be displayed on it.

 

[Erik Olson]

The Sky Is Falling! The Sky Is Falling!
Lets get real 40 people being let go is not the end of the world nor is Apple saving millions of dollars by not showing at NAB or even "MacWorld" mean that they are only interested in iPhones. They have become one of the best managed companies in the world. I have been using Final Cut since 1.5, and have see it grow into the standard editing platform. Could it be better yes, we all know of little things that need work, but I do not think with the advent of a major new device which will display moving images (the iPAD) apple is about to let go of a division that makes the software needed to make the programing which will be displayed on it.

I don't think I was saying that 40 layoffs pointed to anything but 40 layoffs. That in itself may not be an indicator of a systemic problem. As was said earlier, it could well be that perhaps a DVD authoring team simply came to a contractual / mandate conclusion and couldn't be reasonably absorbed into the larger development unit. Who knows?

What cannot be ignored is Apple's shift toward more profitable consumer products and applications. The numbers don't lie. Apple is, with the iPad and next-generation iPhone, poised to continue their push into an even more dominant position in this segment.

As Barry said, Apple has been moving toward making subscription-based services a major part of their bottom-line. They have revolutionized - monopolized? - the music-subscription industry the way Netflix has changed the way movies are delivered. They are out front and everyone else is struggling to figure out what they're doing. By the time they do, it's almost too late.

Consider that Apple moved 1 billion applications and that they have a share of every application sold. Now, the free to paid application ratio may be as high as 1:15, but application developers are becoming more and more savvy at capturing dollars from thrifty consumers. I've recently purchased several ~$10 apps that simply outperformed anything on offer for free or less than $1.99.

Apple puts nothing but oversight and open-source [sic] into these transactions and gets all the benefit. Moving into the very near future, the apps will drive billion-dollar numbers to Apple's bottom line. Contrast this to their $4B computer business, which is a supreme hassle of development, licensing and high-overhead manufacturing. Worse is the software segment - especially for the very small professional tier.

Jobs isn't going to allow nostalgia for a product or a passionate (but small) group of users to drive his business decisions.

 

[philiplipetz]

My intuition as an ex CEO of an software company that Steve Jobs tried to buy (just stating basis for opinion since that seems to matter here), is that Jobs likes to bath his products in reflected glory from high end, highly publicized, pro users, such as movie teams. Look at the Apple start page feed, it constantly features so and so edited this film on FCS. I agree that ProApps are no longer a significant revenue source, but they are still great PR tools. That has great value in the Apple universe. It is much easier to justify the high Mac prices when you tell people they are getting pro platforms, and to do that you have to have pros using it.

If they cut FCS loose it means that Apple has abandoned this marketing model and is committed only to becoming an integrated delivery platform (and that is their future focus, but not necessarily their ONLY focus).

 

[ZazaCast]

The Sky Is Falling! The Sky Is Falling!
Lets get real 40 people being let go is not the end of the world....

I could be if YOU were one of those 40 people!

 

[Yak]

Yes any job loss is not good news, but to the point of "pro apps" just look at Sony , when the walkman came out they did not stop making Broadcast cameras. Apple is no longer a little company making nitch products for schools (the Apple II) They have become a major force, so even though their Pro division is not a large part of the business this does not mean they will let it go.

 

[ZazaCast]

Yes any job loss is not good news, but to the point of "pro apps" just look at Sony , when the walkman came out they did not stop making Broadcast cameras. Apple is no longer a little company making nitch products for schools (the Apple II) They have become a major force, so even though their Pro division is not a large part of the business this does not mean they will let it go.

...perhaps they'll move that to China too!

I agree with Barry's take. You have to go where the money is. The writing was on the wall back in 2007 when they changed their name:

1/25/2007
"Apple's name change (from Apple Computer) earlier this month highlights the company's new reality: Chief Executive Steve Jobs' strategy today revolves around converged consumer devices much more than around personal computers.

On the same day it announced its name change, the company launched the iPhone, a cellphone/iPod hybrid, along with Apple TV, a device to deliver video content downloaded through Apple's iTunes service to consumers' television sets."

 

[Kellar42]

I agree on the P.R. point...seems like a point of pride with them and their 'mojo' seems to be part of their overall business success.

I however, would not mind seeing a blending of iMovie and FCP...iMovie has one of the most intuitive interfaces I have ever used, with lousy options for codecs, frame rates, audio, precise sorts of edits or transitions, etc, etc.

 

[philiplipetz]

I agree on the P.R. point...seems like a point of pride with them and their 'mojo' seems to be part of their overall business success.

I however, would not mind seeing a blending of iMovie and FCP...iMovie has one of the most intuitive interfaces I have ever used, with lousy options for codecs, frame rates, audio, precise sorts of edits or transitions, etc, etc.

I LOVE the iMovie visual interface. Much easier to visualize cuts, at least for me. Seems to expand into large multiple monitors very well. Loved it when they said that that interface was going to move to pro apps. But will you be willing to undergo at least one generation of disruption as compatibility issues with add-ins and works flows is ironed out? I would, but I am not as mission-time critical as some of the users here.

As far as PR goes, imagine that FCS resembles iMovie to the rank beginner. Forget the innards, just look at the UI. That would be a powerful selling tool to differentiate Apple from the pack. People love the illusion of free power so they can feel like the pros.

 

[ethan cooper]

I LOVE the iMovie visual interface. Much easier to visualize cuts, at least for me. Seems to expand into large multiple monitors very well.

And I absolutely HATE that interface. Whatever, if Apple falls behind we've got to move on. Being tied to one platform or the other is never a smart move, you've got to be willing to roll with the punches. I switched from Avid to FCP back when Apple gave us the ability to edit HD for $1,500 (or however much it was) while to do the same thing on Avid was 10x that. If I have to jump ship in the next year because it makes sense, then so be it.

 

[Steve Smull]

Apple has a massive investment in the infrastructure behind the ProApps. Although the ProApp products themselves are not profit generators in the same magnitude as their products in their consumer space, Apple has some compelling reasons to keep the ProApps division on board at the mothership.

They serve as "Proof of concept" and an provide upgrade path for consumers using their amateur software. They keep Mac sales strong and their existence portends what *will* be evolving in the consumer space (yes, iMovie for iPads).

They need to have a foundation for QuickTime and h.264.

And of course there is the Adobe issue. They don't want to hand Adobe the keys to the castle.

If they were to spin off FCP, whoever bought it would make a PC variant and then the Mac variant would possibly suffer the typical fate of less support because the bulk of the profit would be in PC sales. Apple knows this. Bottom line: They can afford to have FCP be a loss leader if necessary.

I think the saving grace of the "less profitable" ProApps division is in several arenas. One very important fact is that it is profitable for them; so even if it is not AS profitable as some of their other endeavors, profit is profit. And perhaps much more critically for them, keeping tight reign on ProApps means developments in the ProApps can filter down to the consumer apps and mobile devices in a controlled manner (which Apple thrives on).

That's the final word- Apple gets to control which elements of the ProApps it runs through the Compressor in Steve Jobs brain to produce future consumer oriented software which WILL drive sales of iPads and all the inevitable spin offs from that effort.

That's why they won't sell them off even if the profit of the ProApps does not loom as large on a spread sheet as the low hanging fruit they are plucking in the mobile space. And of course they ARE picking low hanging fruit; it may come to pass that the huge lead they have in the mobile space is diminished over time to the competitors who are and will be scrambling for a piece of that sweet pie. The competition will offer incentives (such as "free") which will no doubt attract attention, so Apple may eventually need to come back to it's core foundation as a developer of insanely great integrated software and hardware solutions at the high end where it's harder for the competition to compete.