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Apple Pro Apps

Why Apple Insider couldn’t be more wrong!

They’re almost certainly 180 degrees off with their interpretation.

Today Apple Insider got the echo chamber of the Internet buzzing, with their post Apple scaling Final Cut Studio apps to fit prosumers by Prince McLean. It’s a great headline and I can’t blame Prince McLean and Apple Insider for running with it: it’s bound to get them a whole bunch of links.

However, they couldn’t be more wrong. Factually they have the entire history of Pro Apps at Apple just plain wrong. That’s probably because Prince McLean isn’t exactly well known in the professional video communities and because that history is only known by those who where paying attention at the time. (And also, Apple have definitely encouraged the inaccurate version of the Pro Apps history mistakenly quoted at Apple Insider.)

More on that in a minute. Aside from the factual errors in the history, I think they have had some data from an insider that they’ve totally misinterpreted and the true interpretation is incredibly positive for Final Cut Pro.

Now for the standard disclaimer. I’m not a rumor monger. I gather data from a lot of different places; have watched the professional video software industry closely on a day-to-day basis; and am very good at interpreting and interpolating meaning from the data points. However, I do have a way-above-average history of accuracy in my predictions, something that cannot be said for Apple Insider (G5 Powebook anyone? Where’s my Final Cut Extreme Apple Insider?)

In the late 1990’s Macromedia were going head-on against Adobe: whatever Adobe could, they could do better. There was Freehand against Illustrator; Fireworks to ImageReady; Dreamweaver vs GoLive; and there was to be KeyGrip against Premiere. In fact Macromedia snagged the three core members of the development team for Premiere 1-4.2 and they started work on KeyGrip. KeyGrip had evolved to become Final Cut by NAB 98, where it was being shown in a small demo room in the basement. That was my first exposure and I still have the T shirt (which fits a much younger man).

Macromedia suddenly decided to stop fighting Adobe and jump on this new thing called the Internet. Good call. So Macromedia had no need for Final Cut and where in fact shopping it around before NAB 98. Media100, who were going to use KeyGrip on PCs with their Vincent Card but became frustrated with how far behind schedule it was they went on to develop Finish, passed on buying Final Cut, probably because of the history. 1998 was the year that Media100 launched a Windows app. Premiere had gone cross platform at 4.2 and Premiere 6 was developed for both platforms.

This was the year that it wasn’t looking all that good for Apple. NAB was PC all the way. Even Avid had endured the “we’re going only to PC” debacle/rumor/whatever.

Apple eventually purchased Final Cut about three weeks after NAB in reality to ensure that there would continue to be a Non Linear Editing application on the Mac. I also believe that someone figured that Apple’s FireWire (they developed it) port combined with the iLink on Sony’s DV cameras just released (in reality, also FireWire) combined with the new software could sell some Macs. That was a smart move. When I saw Final Cut in March 98, it was working with some Targa dual stream cards, which was not as robust as when Final Cut Pro was release at NAB 99. But Final Cut Pro had native FireWire/DV support: perfect with those new Blue and White G3 towers with native FireWire!

But Apple bought Final Cut Pro as a defensive (and marketing) move. I seriously doubt that there was a cohesive Professional Applications Strategy in 1999. Or 2000. But by NAB 2002 there had been some serious planning going on. By then (or shortly before) there was definitely a Pro Apps strategy in place. (If I recall correctly, largely attributable to Richard Kerris.)

I do know that the Final Cut Pro team were a whole lot more open then than they are now. It was a different time at Apple. I’m very confident, from conversations at that time, and when Apple went on the Pro Apps buying spree, that the strategy of a Pro Apps group came well after the Final Cut Pro purchase. When Apple saw how successful Final Cut Pro had become, and how valuable its nascent involvement in the professional film and television world was for selling iMacs with iMovie in the heartland, a Pro Apps strategy evolved.

And Apple went on a buying spree:

  • eMagic (Logic, Logic Pro, Garageband and Soundtrack Pro have evolved from that purchase)
  • Prismo Graphics for “LiveType” (a Cocoa version of India Pro)
  • Nothing Real (Shake) and Silicon Grail
  • Astarte (DVD Studio Pro 1-1.5)
  • Spruce (DVD Studio Pro 2 onward)
  • The Motion team who had previously created combustion and it’s ancestors (well, they had just been let go from discreet and Apple employed the whole team so technically Motion was developed by Apple employees)

and so on.

Apple have poured a lot of money into the Pro Apps and in turn it’s made them a lot of profit on the software division. “Highly Profitable” according to one very reliable source.

So, to the substance of the Apple Insider rumor: is Apple turning Final Cut Pro into Final Cut Prosumer? Let’s consider some data points.

  1. Apple does not like to be second best in anything. Consider DVD Studio Pro. DVDirector, the product they purchased Astarte for, was released by Apple as DVD Studio Pro 1 – effectively DVDirector 2.0.  There was a 1.5 release but DVD Studio Pro was not getting the professional respect that Apple hoped for. (Was that polite enough?) So they purchased Spruce. Although it was PC only and immediately killed, Apple bought the best available knowledgeable engineering team and abstract layer code. This became DVD Studio Pro 2 with the Pro Apps kit interface. (The first app with that Interface Framework.) They genuinely want Final Cut Pro – or its successor – to be a truly great application for their target market, which may not be senior editors on studio pictures!
  2. Apple derives a lot of benefit from the Pro Apps.
    1. The division is highly profitable. (500,000 users upgrade a version of the Studio and it’s $150 million). Not iPod territory but respectably profitable. (And they do help sell some of those expensive MacPros.)
    2. The technology is now interwoven throughout their iApps.
    3. There is a huge marketing advantage from the Pro Apps, such that it’d be worth keeping them if they were only just profitable. Every time a documentary is nominated for an Academy Award edited on Final Cut Pro, Apple sell 10,000 copies of Final Cut Express and an iMac or MacBook Pro in the heartland – it’s aspirational but affordable.
  3. Apple are pushing all their applications to 64bit and to Cocoa. Final Cut Pro has a harder-than-most development path because of the history (cross platform app to OS 9 to OS X to Intel and now to Cocoa and 64bit).
  4. Apple need to come out with a very strong version at the next release. Avid have been very strong with their recent Media Composer releases, particularly with workflow features that editors appreciate (a better open timeline than Final Cut Pro, for example). Adobe have just released a version of Premiere Pro that leverages Apple’s hardware for performance far better than Final Cut Pro does. Apple know this.
  5. Apple has the financial resources to wait until something is right, rather than release a half-finished version.
  6. Apple does not leak. OK, I think I’ve substantiated that Randy Ubillos is back in a senior designer position (or more) but really, Apple employees don’t leak. They’re my worst source of information that isn’t necessarily public knowledge. Randy, for those who don’t know, was one of those original three that went from Adobe to Macromedia: he was the original designer of Premiere 1-4.2. He is also the lead designer for Aperture and iMovie 09 was almost a personal project before Apple picked it up.
    1. So Apple Insider have not had a review copy of any development version of Final Cut Pro (next); it’s almost certain they don’t have any substantial information at all, just a snippet. Perhaps a quick view of an interface or mockup? There isn’t anything substantial in the article.

Ok, given all that, here’s why I think Apple Insider are about as wrong as anyone could be. They got something: a tip or a sneak peak or something. The most likely thing they saw that could lead to this type of misinterpretation is they saw, or more likely someone visiting Apple saw, a screen supposedly from the next version of Final Cut Pro and it looked, superficially like iMovie. Combine that with Randy Ubillos’ move back to Final Cut Pro and the leap is obvious, but wrong.

Apple appear to be revising the Pro Apps kit from it’s original incarnation in 2002-03. We’ve seen hints of more HUD (the white-on-black interface for Motion’s floating palettes) like interface design in places, and that look is very similar to iMovie 09. They’re looking for designers now. It’s likely that whatever the current interface design is, it’s not there yet or they wouldn’t be hiring designers now!

Let me go out on a limb and say that it much more likely means that Final Cut Pro is getting a very thorough rewrite. Not just a 64 bit/Cocoa rewrite (and hopefully take advantage of modern OS X features) but a complete rethink.

When iMovie 09 was demonstrated at LAFCPUG, there were a lot of people who wanted iMovie features incorporated into Final Cut Pro. Not dumb Final Cut Pro down to iMovie but take the best features of iMovie and incorporate them. While you’re at it, if nothing’s sacred in the current design, let’s take the best from Avid (metadata management – the groundwork has been happening since FCP 5.1.2 and the evidence is in the XML); the importance of performance from Adobe (strap in Grand Central Dispatch and OpenCL and make a showcase for Apple’s technologies); the best of iMovie.

This actually makes me much more hopeful and positive for the next version of Final Cut Pro. It suggests that Apple are serious about rewriting and not just changing out the minimum possible. And if it looks a little like iMovie 09, that wouldn’t be all bad. (But could you borrow customizable interfaces from Adobe, please?)

That’s why I believe Apple Insider misinterpreted the snippet of information and that the opposite is true: Apple are serious about making the next release the killer release everyone is hoping for.

Above all else, I reserve the right to be wrong. It’s a guess: an intelligent guess, yes.

78 replies on “Why Apple Insider couldn’t be more wrong!”

Philip,

This is a well reasoned response based on your career knowledge of Apple and the post industry at large. I happen to agree with you, and I think you nailed it at the top when you you said, “It’s a great headline”. Unfortunately, your logical rebuttal won’t generate the kind of attention they’re after. Therefore, your response will probably get buried by the “sky is falling” avalanche of fearful faithful worried about the future.

My take? Whatever. Apple will do what they will do. So be patient and see what they offer next. Then you can make your decision to stay or bolt. Until then, it’s just wasted bandwidth.

mark

I am surprised how ready people are to believe the worst about Apple and Pro Apps. Instantly the sky is falling at the suggestion rain may come!

But you are right that logical rebuttal won’t get the traction of the wildfire of rumor – fortunately Apple don’t care.

And I completely agree with your take in the last paragraph. Stop spending all day on rumors and get on with the job on hand today. Nothing that might (or might not) happen in the future affects today’s job. Or tomorrow’s job. Someday in the future it might cause a change but not today. Or tomorrow.

philip

I agree with Philip. It simply doesn’t follow that Steve Jobs would indicate support for Pro Apps and declare that the next version will be awesome – just to deliver iFinal Cut. “Insanely great” products win Oscars and Emmys and contributes to the Apple mystique – not by selling units to every “also ran” with $500 and an iMac. However, it might have a nice affect on the quality of YouTube vids.

Tom

Great post – I hope you’re correct.

A couple of thoughts:

Apple need to maintain the support of content producers if it want h.264 or the like to be the victor in the current ‘campaign’ against flash. Without a robust FCP, one would expect that content producers drift away from Apple and maybe towards Adobe…

Secondly, I think Steve identifies himself with ‘creatives’. Arguably, without the creative community, Apple would have been unlikely to have survived the late 90’s/early 00’s. Did you know anybody who owned a mac -even 5 years back – that wasn’t a filmmaker/musician/graphic designer/etc?? Few outside the creative community even knew that Apple still existed…

…

I agree with many of your points, and I can’t for a moment believe that Apple would be interested in dumbing down FCP (outside of their already existent cut down FCE and the technology sharing with iMovie).

However, you should be careful about statements like:

“1.The division is highly profitable. (500,000 users upgrade a version of the Studio and t’s $150 million. Not iPod territory but respectably profitable.”

The division might be highly profitable, I do not know one way or another.

However, revenue is not profit. $150 million for instance are enough to pay about 1000 employees for one year. And that at costs ($150,000 / head / year) which are barely enough to cover the salary and maintenance overhead for a junior position or a tester, not for any kind of experienced developer, which can easily go into the $250,000 / head / year and more in the blink of an eye, and for the few senior product managers the sky is the limit.

And that is just the manpower and infrastructure cost. Then you have on top of that license costs for all the patents and technologies that FCS uses, licesing costs for the media files that they bundle, marketing and advertising costs, then retail costs for selling the product (retailer network margins, sales and value added taxes for all the countries where that is applied in the advertised price) and even the few dollars worth of costs for product packaging, discs and so on and so forth.

Of course, Apple quite likely does not have that large of a team for their product palette (but the team is large enough that 40 people can be kicked out without killing the product, so we are still likely talking hundreds of heads).

They also realize significantly more revenue from full version sales instead of upgrades. And perhaps there are even more than 500,000 upgraders per year (though obviously Apple doesn’t release paid upgrades every year, so half a million is quite likely in the ballpark, given how not everybody upgrades at the same pace).

But that $150 million number is still not the profit that Apple makes on the FCS product line. No way in hell. Which just leaves the other points that you correctly mention, its value as R&D resource for the iLife product range, its value as hardware sales generator and its value as “halo” product for the platform. I believe that is the true value of FCS for Apple.

The “highly profitable” quote was from a Product Manager in the team and it was an instant response to my comment to them that “my back of the envelope calculations suggest the Pro Apps are profitable for Apple” to which the instant response (before thinking I suspect) was “highly profitable”. (Of course no numbers or follow up from the comment was provided in typical Apple style.)

Calculating all the costs vs revenue, they’d have to be incredibly bad manager for the division to not be highly profitable.

The $150 million number was for half the customer base upgrading one version. The decade plus revenue for Pro Apps has to be well over $500 million.

Phillip, you’re very likely dead on. With Apple wanting to hire designers, it points at a major upgrade coming. Feels like a year or more off to me…

FCP being used by the pros sells a ton of prosumers… it’s not going to be dumbed down, it’s going to be easier to use though I’ll wager. It sells a lot of MacPros too. Just doesn’t make sense to dumb it down.

Jerry

Philip, you have written an excellent synopsis of the history and evolution of Apple’s pro apps. With Final Cut Studio sitting on top of the hill in feature film production, episodic television production, event, corporate, and wedding video production, and web content production – I would find it difficult to believe that Apple would let this lead slip to Adobe or some other vendor.

And, if this screenshot is to be believe and is credible, then Steve Jobs has just destroyed the credibility of this AppleInsider article: via @jackferry99: RE: http://twitpic.com/1p0ftb/full

Thanks for taking the time to write up the history Philip. As is the case better than 90 percent of the time you and I are in total agreement. I lived that history.

The deal with Appleinsider is they love link bait. But this one may have pushed their flagging credibiliity over the edge. But hey, the check will cash.

Oh and one thing about the whole ‘consumer friendly’ thing. Compressor now has a ‘Youtube’ preset on the welcome screen. Does that make it more ‘consumer friendly’? Sure, I guess you could argue that, but it’s no less a professional tool.

Carey

Nice analysis Philip. As someone who goes back as far as you do on this, it was a nice trip down memory lane. Having said that, I’ll add one angle that you may not have considered:

“None of this matters if Apple doesn’t stop moving like a glacier on the Pro Apps”. The best hand in the world doesn’t win if you take too damn long to play it. Let’s be honest… the last several releases of FCS have essentially been a new paint job on a rusting car. We still don’t have the most basic of options (Blu-Ray) and please don’t mention Compressor as a solution. How is it that a $69 copy of Toast can do it, but not the $1K FCS suite?

Bottom line: they’re running out of time, and the DSLR’s are aggravating an already bad situation with FCS. Right now, I think Apple knows that they completely blew it, and I think there’s a whole lot of “whistling past the graveyard” going on over there at Apple.

Will the Pro Apps die? Like you, I don’t think so. Where we differ as near as I can tell, is that I think that like an aging rock star, by the time they get their act together they may be playing to a much smaller room, so to speak. If Apple really wanted to get serious, they could throw a ton of effort at it like they did with the iPad. Sort of a “put a man on the moon by the end of the decade” kind of effort.

Everyone seems to think that Steve feels pro video is important. Why? In your trip down memory lane you forgot to mention that he single handedly killed video on the Mac when he killed the 5 slot Mac an announced that “nobody needs more than three slots”. I was one of the people forced to switch to the PC to keep the video business alive. Steve’s always had the consumer mindset… we would do well to remember that. I’m not an AVID fan, but at least they’re focused on the pro…

The think is Mitch, I don’t think they are “moving like a glacier”. I believe they’re busy at work just that we don’t see the effort.

Great Read. I have to admit, I’m one of the fearful one’s. Phillip you made a lot of great points I also don’t think would kill a app or downgrade it after Global success with it. We will see it time how this all ends, hopefully for the best.

Great reply, I wish we could banish the term “prosumer”. Either you make money using a product or you don’t. So who exactly is a prosumer, someone who likes to use “pro” level tools but does not make money by using them so they are now a consumer who just pays more for something they don’t need? Or are we talking about people who could use the pro version but can’t afford it so they are no longer a “pro” because they can’t buy the “pro” tools. So how much do you have to spend to be called a pro? Do you even need to make money? Ugghh , see how confusing this can get!

Editors call Adobe Premiere a Prosumer program but I built an entire business on the back of that program. No, we did not make feature length films. Let’s face it Hollywood is not using FCP except for initial cutting and logging. Everything else goes into some very expensive (+$50,000) flavor of AVID with all kinds of support software and hardware. An Edit suite with a standalone MacPro and a Kona 3 card is not going to cut a Blockbuster release, BUT, that does not mean it is not a pro system. Just because you are a high end user does not make you more of a PRO then someone converting VHS tapes to DVD using a $300 dollar VCR. It’s a pro deck, it makes money.

Of course we use final cut now but does it matter? I will switch back to Avid or Adobe in heartbeat if the software can no longer do what I need it to do to make a living. e.g (a pro). It’s the output of these tools that matter, and it is up to the final consumer of your product if the tool you use is pro or not. Because they will let you know very quickly. Just go to a film festival and you will see how little it matters what equipment you use to tell a story. Great visuals mean nothing if the story, pace, and edit are executed poorly.

All Apple needs to do is let us mix every format on the timeline without re-wraping, converting, etc…and find a way for me to use all the ram processors I already purchased to transcode when needed. Realtime output to Blu-Ray would revolutionize the market…

Ok ,End Rant, Back to editing, Great Article

Wonderful article.

@Carey – I think the other item about the “YouTube” preset is the fact that so many professionals use it. At my station we upload all of our programs, extra content, etc to YouTube. As a small station with a very small (and getting smaller) budget, YouTube is the best option for getting video out to the public. And it’s easy. There’s almost no learning curve on how to get video on YouTube, or how to find video.

Very grateful for this rational dissection of a flimsy rumor. It’s amazing how many people wish the worst even when it would adversely affect their lives.

While I would agree the sky may not be falling there are some things to consider. The very real position applications that Apple has open can only go 1 of two places. Given that we are already a year since the last “patch” that Apple called a release I will give them the benefit of the doubt and figure last years bogus release was simple something to keep the users at bay while they’ve been working on a total rewrite for the past 2 or so years. If you are NOW hiring Sr. Interface designers it is because 1) you’ve finished with the next version soon to be released and the new hires are for the NEXT version or 2) you’ve so screwed up your rewrite that you’ve thrown in the towel and are scrambling for a rewrite to fix the things that are currently hosed. I’m going with #1 (hopefully) so this observation is simply a Red Hearing.

On your point on profitability and revenue??? We are talking about a 50 – 60 Billion/year company. 150 Million is 1/3 of 1%. FCP profits amount to round-off error on their annual reports. Steve is all about consumer and he’s all about compelling platforms that allow him to be a content provider. There will be a point where ProApps becomes an opportunity cost (headcount can produce MORE revenue in other departments) as opposed to P&L. At that point or somewhere close to it, I suspect Apple will divest of ProApps. It would be a good deal for someone else as well as for Apple. I don’t like it but as Tony Soprano likes to say, “Hey, it ain’t personal, it’s business”.

We shall all see when FCP Suite 4 arrives. It had better be very soon and it had better blow all of our respective doors off. Adobe’s Mercury engine has thrown down a substantial glove. Apple best have something to counter. At the end of the day, I have only commitment to get my job done for my clients. I’d like to continue using FCP but I commit to my customers, not Apple.

As much as the pro users currently working in Final Cut Pro & related apps are eager for an overhaul of Final Cut, I cannot agree with you and your logic.

At this point it is commonly accepted that the revenue generated from the pro apps collection is a tiny percentage of Apples overall income. It just doesnt make any economic sense for Apple to completely redo Final Cut. I must agree that the prosumer market has the greatest sales potential for Apple. Case in point the ipod.

The fact that Apple is looking to hire senior interface designers specifically for Final Cut is pure speculation. They could be hired for anything.

Adobe has come on strong with CS-5 and the winds of change are already blowing. Apple has moved into the hardware market (ipod, iphone, ipad) and Adobe has steadily honed and reinvested into their software.

Final Cut will be updated, but it wont be as substantial as you all expect.

Good Day

Great read, Philip. Your knowledge really comes through here, thanks for your time and input.

I agree 100%, even though you just taught me a few new things. I do feel this next upgrade will be huge.

I know Steve Jobs really likes Henry Ford’s quote, “If I’d asked my customers what they wanted, they’d have said a faster horse,” and I feel like this is happening with FCP. I think Adobe and Avid have done their thing, and Apple took notes, and is going to release something that will blow us all away. And I also really hope I’m right.

Thanks again,
RP

This history lesson is well delivered, and as Carey said, one that I lived personally. The current bluster going between Adobe and Apple is probably the biggest symptom currently visible as testimony to Apple’s general take on the competition. I hardly think they will sit idly by and see their brand diminished on account of Adobe’s current software performing better on their own hardware in the high-end market segment. That, if I know Apple, won’t stand.

Something tells me that, compared with Philip, no one at Appleinsider has anything near the amount of pro experience in the video world. That’s no slight on Appleinsider, just a basic truth about Philip’s investment in the industry over a career.

Nice article, although I have to be skeptical that Apple consistently cares about shipping the best product.

It’s much easier to assume the worst when they are shipping apps like Soundtrack Pro, which was a simple app in version 1 but at least mostly worked properly, but in versions 2 and 3 has become a buggy dog of an app that’s hard to trust for any serious work. Yeah, I still tough it out and use it some, but even now I’m finding new instances where it’s creating defects in audio files and having to consider dumping it.

Man…you guys are drinking so much Kool Aid its sickening.

The $150 million number is really misleading. As I stated earlier, Apple has been focused on hardware mostly and itunes to a smaller extent. Dont believe me? Take a look for yourself. Notice how small the overall software segment is….and that is a mixture of all the software…not just Final Cut

http://www.9to5mac.com/ipad-sales-cannibalization-494596

Ramos

I hope that you are all correct on this, but the degree of small mindedness that foisted Quicktime X on professional filmmakers ( with no Quicktime ‘Pro X’ or whatever) had me download the Smoke for Mac demo just in case.

QuickTime is in transition, like the OS was a few years back. With all surgery there is some pain, but QT 7 player continues to do everything it did in earlier versions. No QT functionality has been lost in the important part of QT – the frameworks and system components. The player is almost irrelevant.

Philip

Thanks for a very well expressed article. Yes, a lot of us are very nervous about what we can expect from Apple, and if it will arrive in time. As a trainer, it’s double the stress. But, we’re crossing our fingers for the best. This article is very much needed, thank you.

Best to follow protocol with providence in Apple’s plans for FCP’s future. Let’s tip the hat to Adobe and Avid for making great software for Mac-based editorial and at the same time allow the process to happen at Apple to rewrite the Pro Apps to take advantage of the power of where Mac OS X and the Macintosh are headed. Stay creative, stay busy, and let Apple unleash their new offerings when they are ready.

Nice history. But your backgrounder has little bearing on Apple’s current plans. As one of the laid-off FCP employees, I can confirm that the new FCP will indeed be a simplified, iMovie-like interface with many fewer features than the current app, and specifically aimed at the prosumer customer, who Apple sees as a growing market segment (as opposed to the stagnant professional high end of the business). When Apple officially says (via Bill Evans, Steve Jobs and others) that the next FCP will be “awesome” and that “pro customers will love it,” they aren’t necessarily lying. But they certainly are OPINING. They may be deluding themselves, but they seem to believe that most pros will accept a simplified interface based on the iMovie model, with far fewer features than the current FCP. Maybe they’re right. Time will tell.

You may have been too deep in the forest so you see only the local trees rather than the whole forest? They already have a dumbed down app: to remove features from FCP guarantees they’ll not sell upgrades, the most profitable business. And there are simply not that many more people who need more than iMovie provides for video editing than the 1.3 million or so there now are with FCP.

Apple is not a company I consider for committing commercial suicide. So, while you claim Insider status (without identifying just what your role was or full name) we have to take it as rumor or guesswork.

Besides, see my last comment: Apple officially denies that they are taking features out. Specifically.

Thanks for commenting

Philip

Prosumers use it because it is a pro app, dumb it down and the “prosumers” will just go to Adobe or Avid. Making something less professional is the exact opposite of what prosumers want, they want to do exactly what the pros do and they know the software just as well as the pros do. The only thing that separates a pro and a prosumer is how they make their money, its stupid to assume prosumers are incapable of understanding the software.

Having owned a Media100 Suite, and then buying FCP at NAB as soon as it was released, “I sold the Media100 Suite the next day after I got back from NAB”.

Knowing Phillip Hodgetts, and being familiar with the history of FCP what Phillip is saying is correct.

I can’t see Apple allowing FCP, not to be the leading non linear editing system with 70% of users.

I believe SCRI reports have Final Cut Pro at around 50-51% of the “Professional NLE Market” in around 2008. Avid Media Composer was next at 22%.

My experience parallel’s yours Stephen: Media 100 for years; beta tested FCP 1.0 and sold my last media 100 about a year later.

Philip

I’ll be very happy if Apple releases 64-bit. That will be huge for renders, for native high def, etc.

What Ubillos did with iMovie may be great for consumers but it left me cold.

Apple, please don’t be like Adobe and screw up working apps with unnecessary interface changes…. software revision shouldn’t be treated as job security– do a change only if it’s really needed to make the existing app more of what promises to be.

– lsm

I switched to MAC PRO and Final Cut late last year after years of Discreet Edit and Premiere. I felt that CS4 was not good with Blackmagic cards and I moved to FCP, also in an effort to become compatible with my advertising clients.

But I’ve just installed CS5 with the Mercury and the difference is extraordinary. Being able to play identical timelines in multi-tracked/layered mode without rendering is incredibly time saving. The same sequence in FCP requires rendering in every case. My Canon D7 files play with no rendering or stuttering at all.

I still like much about Final Cut, but I crave for a Titler like Premiere has. I would advise FCP users to purchase CS5 and run it side by side with FCP. In that way you can have the best on both worlds on the same system – a time and money saver. Just make sure you have a GTX285 or Quadro 4800 to enable the Mercury engine.

Competition is good and I really hope Apple steps up to the plate. The Final Cut updates have been slow in coming and based on Adobe’s 64-bit development time, we could be waiting a while longer for FCS4. If those designers have just been hired, how long is it going to be to bring a totally revamped product to market? Avid and Adobe are here right now and doing it.

“Calculating all the costs vs revenue, they’d have to be incredibly bad manager for the division to not be highly profitable.”

Actually, I think it is quite unlikely that they are highly profitable as a division. And the reason for that has nothing to do with their internal management, but rather with something that I believe is dictated from further above: the fact that Apple is selling their products at what are essentially – perhaps unkindly put – dumping prices.

Compare for instance the pricing of the full version of FCS to Production Studio from Adobe (note I don’t compare them to Avid, which are even more expensive):

Apple: $999
Adobe: $1,699

Or the upgrade price:

Apple: $299
Adobe: $599

Apple is between 50% and 100% cheaper, and that is not even taking into account their far more generous upgrade policy, because the Adobe price is only from the previous version, users of older CS bundles or individual products will pay far more to upgrade to the latest version. Adobe also has more opportunity to upsell to stuff like Master Collection.

To be fair, the Apple suite doesn’t include as many major products, so their revenue costs in terms of development are probably lower. Also, Adobe has products which are more localization intensive, so their costs there are also higher – but, then again, so are their prices for localized products in international markets, sometimes shamelessly higher, so it probably evens out.

While Adobe is certainly profitable, it is not really in the stratosphere, especially considering they are a software comapny. In their FY2009, they had revenue of $3 billion, but an operating income of about $700 million, a margin of about 24%. Of course, the CS products are not the only thing producing revenue for Adobe (they only represent about 60% of their revenue) and Adobe does not break down their profitability, but given the others items producing revenue in their balance sheet, it is probably fair to assume that the overall profit margin is representative for the profit margin of the CS products as well.

So, even if Apple pro division is so excellently managed that it manages to maintain a profit margin similar to Adobe, whilst selling similarly complex products at half the price (a management result which would be a pretty amazing trick in itself!), it would still mean that their actual profit from that example and theoretical $150 million revenue is only about $40 million. Truly insignificant peanuts in Apple’s balance sheet.

Could be….but you know….Shake was a better product and you can see what they do…. and yes, also Shake gives money, also Shake elps to sell MacPros….

so…¿why they cut the development of Shake?

About DVD Sudio Pro, well….the last upgrade dats from 2005 (ufff…..!!) and it doesnt support yet BluRay authorizing, only just DVD….

You really think that this is “pushing hard” the top line??

I really doubt it.

About Final Cut….Lets see……

Shake’s coide-base was very old. In fact it was a GUI that generated a script, that then ran. I would have been impossible to move it to use GPU acceleration or any modern technology. The only solution was to rewrite completely. Except it’s a very small market. Why they cut deevlopment (if they have) I don’t know. (It seems they have)

DVD is obsolete in Apple’s mind. They’re never going to do Blu-ray beyond what they’re offering now, so there’s nothing to add to DVD SP.

Philip

It pains me the turn-coating that users succumb to when whispers of change happen to the pro apps. Change is hard. They all kick and scream but in the end it they proclaim and wonder why they were scared in the first place.

“Highly Profitable” as a division is a direct quote from a former product manager in the division. As far as I’m concerned it’s not a point of argument after that.

Adobe is a different company that earns most of it’s revenue from it’s Postscript and PDF products. Video products are a smaller profit center (like they are at Apple in fact).

Philip

Also, while $40 million is insignificant in net revenue (profit) to Apple, the division, making 40 million on 150 million would have to be considered “highly profitable” by any margin. I’d love that profit margin and that amount of profit.

Wildly profitable and very important to Apple. Arguably Apple wouldn’t be as “cool” now without the Pro Apps.

Philip

Great discussion and thanks for the very informed article.

I think one thing that has been overlooked is FCS’s role as a driver in hardware sales. How many fewer MacPro’s, 30″ Cinema Displays and 17″ MBP’s would Apple have sold were it not for the Pro App suite? Then there is the trickle down effect to the iLife suite to consider too which others have said.
Like has been said before, if the division is profitable then it is profitable and there is no reason for Apple to close down or sell it off.
However, despite all the positivity surrounding Apple’s seeming endorsement of Final Cuts future, I will still be very nervous come update time.
The reason being that FCS 3 was such a lacklustre release, and that FCS 2 would have been similar had the purchase of Final Touch not been rebranded to Color and provided some punch to the suite (albeit with a terrible, terrible UI).
We are still yet to see basic technologies from Tiger to be implemented across the Pro-Apps, never mind Snow Leopard, so we are really talking about a complete re-write or it’s going to be more of the same. Given that a re-write would no doubt lay the framework for the next decade of the software’s development, the stakes become higher.
As far as I’m concerned, I would be disappointed with anything less than a complete overhaul. 64-bit, unified UI, Stability, the works, plus a new approach to editing that will take its users, both casual and professional into the future of post-production. There is no excuse, unless Apple want to hand this entire market over to Adobe, Avid and the other vendors, they need to blow our collective minds.

Under 1.3 million fewer! That’s the official number. If we assume that there are that many again that may not be running a legitimate copy of FCP, 2 million items of hardware. Important for sure, but Pro Apps has to stand alone as a division for profitablilty. Hardware sales are not counted as helping Pro Apps even though Pro Apps help hardware sales.

If you see my earlier post (about 6 weeks back) on what apple are doing with FCP you’ll see that a complete rewrite is necessary (mostly) and appears to be under way. This is just more evidence.

Philip

As a sidenote – its really interesting how much attention the article from AI got. In particular because you really can make a great movie, doc or whatever with the current release. We will not see better youtubes because of an upgraded version of Final Cut. I do not miss anything in version 6. A unified UI would be nice to have. Faster support of new cams, formats a must.

What really needs work is Motion, DVD Studio Pro and Soundtrack. Motion is way too slow to work creatively. DVD Studio Pro lacks support of Bluray and Soundtrack – I don’t know where to start. Roundtripping and workflow needs to improvement and Color should be upgraded from a UI perspective. Really – for me Final Cut is the last in needing an update.

You might as well get used to it Andreas, there is NEVER going to be Blu-ray support beyond “Share”. That’s why DVD SP hasn’t had any love lately.

Colo rreally needs a UI makeover for sure. FCP needs the underpinnings moved to Cocoa before they can do any serious speed improvements.

Philip

Loren said …

“Apple, please don’t be like Adobe and screw up working apps with unnecessary interface changes….”

I really think Adode has been very consistant in their interface and GUI. They really haven’t done a major change since Premiere 6.5 to CS1, and that was a long time ago.

Peter

It’s not like everyone has to trash their expensive Mac Pros. Just treat it as learning a new skill set and buy a copy of Premiere CS5. Or better still, buy an old <CS4 on eBay and purchase the upgrade version only (which comes with Encore which does Blu-ray authoring). This software part of your system is probably one the cheapest parts of the whole enchilada.

My quotes got eaten by angle brackets in the previous post. So here’s a repost:

“You may have been too deep in the forest so you see only the local trees rather than the whole forest?”

Well, I was certainly “in the forest.” You? Nowhere near it.

“Besides, see my last comment: Apple officially denies that they are taking features out. Specifically.”

“Specifically…” Really? Maybe I’m missing something, but I looked at the links in your comment and I still don’t see official Apple denials of the specific allegation that features have been/will be taken out of the next-generation FCP. All I can find are vague, laconic quotes from Steve Jobs that are not specific at all: “Don’t believe everything you read” and “The next release will be kickass” hardly address that specific claim.

Another useful rule of thumb: Don’t believe everything self-interested CEO’s say, especially when they haven’t actually said what you think they said.

When you are a forest you see very clearly what’s happening immediately around you (but without context). When you’re outside the forest you can see the overall shape of it. Being outside it’s sometimes clearer to see what’s going on, even with less data.

You are right: they just said that it would continue to be the tool of choice for professionals. When it’s released we’ll all decide.

But nothing has changed today; nothing will have changed tomorrow, next week or next month. Or any time before they decide to release the next version. If Final Cut Pro isn’t working for you Adobe have fine tuned Apple’s hardware for some amazing performance in Premiere Pro CS 5; Avid are definitely back in the game with two very strong releases, reasonably priced monitor options and much more aggressive pricing.

Nobody makes anyone buy Apple products. If FCP stops being your tool of preference then you’ll have sent the message that Apple’s Pro Apps team got it wrong. But I’d at least like to see what comes out of it before pre-judinging.

And, from what I do know about how the team works (after 11 years of “outside” observance), I doubt there are many people who have any idea what the final version of Final Cut Pro (next) (Final Cut KickAss, Final Cut Awesome?) will and will not have in terms of features. I do know that FCP editors were clamoring for features from iMove 09 when they saw it demonstrated.

I just don’t believe in rumors.

Philip

I lived the history too Philip, from working alongside Media 100 and Adobe, to creating the RS422 plug-in for the MacroMedia editor that got sold before we made a dime on it.

I agree with the comment that Apple went out of their way to drive NLEs off the platform by taking away slots and serial ports. It pushed the NT rush. Media 100 begged them not to kill the 5 slots. Remember?

More to the point, Steve was not happy about Microsoft’s 20% stake in Avid via their stock swap for Softimage (another development project for us that didn’t see the light of day due to bad timing). When that happened, Avid literally went around their place replacing Macs with PCs on desks.

And Apple’s dark times? Only started looking better with the $150M loan from MS birthed those crazy colored first iMacs. Clearly it was not FCP that turned the company around.

Personally I think the birth of FCP was a lark fueled by Steve’s hobby at Pixar. They could have continued to sell just as many (high end) Macs by continuing to manufacture 5 slot machines that Avid and Media100 needed.

Last, keep in mind Mr Jobs isn’t always 100% honest when feeding the media (The Next Big Thing should be a required read for anyone thinking of tying their career to a single computer manufacturer).

Oh, and my “insider” info said at the time Apple bought FCP that it was intended as a “Media100 killer”–nothing about “hey, we just want to make sure there continues to be a NLE on a Mac”.

Truly, Apple will do what Apple will do (like inexplicably walking away from the print and education markets in the early 90s).

““Highly Profitable” as a division is a direct quote from a former product manager in the division. As far as I’m concerned it’s not a point of argument after that.”

Well, I respectfully disagree. First of all, there is the question of how much truth he was willing to tell and then there is the question of what he actually meant (what is highly profitable, whether their profit is internally “inflated” via “licensing” deals with the consumer application division, etc.).

And most of all, the pro division simply does not behave like a highly profitable unit. They have high profile products which have had frozen development for years and years, they killed a major high-end product with no replacement, they lag badly in porting their core application to the newest Apple technologies and in unifying the UI of newer aquisitions, the feature updates were more than modest last time around and they even fired quite a few people.

Now, of course, this all could simply be a false image – perhaps they are lagging because Apple’s top management temporarly shuffled programmers to other projects (one has to wonder why they would do such a disruptive thing to a division which is highly profitable), maybe the strategic goals of Apple got in the way of the further development of certain tools (like DVD Studio Pro) and maybe they simply do work their asses off in creating a great FCS4 which will blow everybody’s minds, and this is just a multi-year project that is suffering some delays.

But the image they are projecting outside isn’t one that inspires much confidence – which is why such rumours get created and repeated and even believed by some. And I don’t think Jobs’ emails do much to eliminate this lack of trust/perspective – obviously the one thing that would help is a clear timeline and/or an product announcement.

“Adobe is a different company that earns most of it’s revenue from it’s Postscript and PDF products.”

I do not know where this particular myth has its origins (because I have seen it often repeated on the Intertubes), but that is not true, and in fact hasn’t been true for the last 15 years or so.

Adobe’s investor reports and financial data are freely available for everybody to look at, and it is very easy to see why the above statement is untrue.

The Creative Solutions segment has consistely realized between 55% and 60% of Adobe’s total revenue (58% in the last fiscal year). This segment includes all of the Creative Suite applications (plus their consumer versions) and does NOT include Acrobat, Acrobat Pro, etc.

Everything that has to do with Acrobat is in the so called Knowledge Worker segment, the business document management products are in the Enterprise segment and together form the Business Productivity solutions segment, Omniture products get their own segment, all the back-end Flash products are in the Platform segment, and everything that has to do with backend print/publishing solutions (like PostScript, Contribute, Captivate, etc.) are in the Print & Publishing segment.

By percentage of revenue (in the last FY) they split like this:

Creative : 58%
Business Productivity: 29%
Omniture: 01%
Platform: 06%
Print & Publishing: 06%

So, one can clearly see that the majority of Adobe’s revenue comes from their content creation solutions, and PDF/PostScript realize only a minority.

So, from this perspective, it is perfectly possible to compare Adobe with Apple’s pro division, because they are quite similar in terms of products they sell and in terms of the expenses they incur.

It is certainly true that out of the Creative solutions, the actual video products are only a part, and unfortunately it is nigh impossible to figure out how much of the revenue they aquire, let alone how much actual profit. However – for the purposes of our comparison – this is not relevant, since applications like Photoshop or Illustrator are comparable in complexity with video applications, and the equation of costs, revenue and profit is equally applicable.

“Also, while $40 million is insignificant in net revenue (profit) to Apple, the division, making 40 million on 150 million would have to be considered “highly profitable” by any margin. I’d love that profit margin and that amount of profit.”

One has to note that the 24% number is operating margin, not actual net profit. The net profit margin of Adobe is just 12%.

It is certainly not bad for a company in general, altough it is far from spectacular in a software company. However, the real issue is that it is not even as profitable compared Apple as a whole: AAPL has an operating margin of 30% and a net profit margin of more than 21%, significantly higher than Adobe.

Which means that even if the pro division of Apple manages the same profits as Adobe (despite the fact that they are selling their products at pretty much half the price), they still are not as profitable as other divisions from Apple, not in total profits, and not in percentages. They would be, metaphorically speaking, “dragging down” the company, as much as one can drag down a company while making money for it.

If net profit would be the main interest of the pro division for Apple, then one could certainly imagine a bean counter somewhere that would decide that the money invested in the pro division might produce a better return on investment somewhere else inside of Apple, where the higher profit margins are realized (say iPhone operations, or whatever).

Which is why I am thinking that actual profitability is not that important for the pro division (in fact, it is perfectly possible that the division is only marginally profitable, if at all), and the main interest for Apple is all the other things we mentioned.

(And also, Apple have definitely encouraged the

In the late 1990’s Macromedia were going head-on against Adobe

had no need for Final Cut and where in fact shopping it around

Apple have poured a lot of money into the Pro Apps

Apple are pushing all their applications to 64bit and to Cocoa

Avid have been very strong with their

Adobe have just released a version of Premiere Pro

I are amazed! This are why English are mandatory for schools… Anyone brains hurting yet???? Geeezzz!!!!!!!!

(Seriously… great article, but a little more time spent proofing would have been a good idea. Or maybe the author got it right and I got it wrong?)

I grew up in Australia where we use the plural form for companies. I would accept that the singular is more correct but with more than 40 years of writing one way, it is challenging to change to the opposite.

The articles here are always proofed by my partner, who also speaks and writes Australian. 🙂

Right usage, wrong country 🙂

Cheers

Philip

One thing I hope that Apple avoids that Adobe, with their new release of CS5 has not, and that is the need to buy a very expensive video card just to realize the benefits of, hopefully, a 64 bit Final Cut Pro. CS5 requires these expensive cards that really aren’t compatible for any Mac Pros that do not have an identifier of 3 or 4. Just absurd to me.
Steve

With due respect to Adobe, the Mercury Engine still gives some amazing performance improvements without a qualifying CUDA card, it just gives more with one of the expensive Nvidia cards. I’d expect Apple will leverage Grand Central Dispatch and OpenCL, as well as the benefits of 64 bit (mostly memory addressing, rather than processing) to give substantial (or massive0 performance increases. You can also pretty much assume that getting the full performance will require “recent” (aka current best and greatest) hardware. 🙂

Philip

Where’s George Dyke to fill in the history even more so. Great piece Philip. Sold and supported FCP systems from v. 1 through 4. Apple will most likely come out with an excellent update, like you suggest.

What the rumor site failed to mention is that Final Cut Studio becoming more consumer friendly to use does not also mean it becomes less valuable to the pro market as long as features and capabilities are not lost.

Having said that, one of the most important considerations is price point. Apple Marketing makes no haphazard calls where price is concerned. If you want to know whether or not Apple is looking to push their product into a more broad demographic you need look no further than price.

It used to be that you could always tell when a product was headed for “End of Life”, just watch the price drop a few cycles. I would say thats not true anymore per-se but price is still a VERY IMPORTANT indicator that something is a up and in this case they want more people then just working pro’s to be able to buy into the software.

Its been clear that Steve is vastly more concerned with the consumer space than any other space Apple is involved in. Thats been very clear for sometime now. What that means for the future of Apple’s enterprise organization is unclear still. As long as the pro space has some value to Apple, they will stay engaged in it but not one minute longer.

If you want to know where Steve’s head is at take note.
This comment by Steve just yesterday at the D8 conference:

7:06 p.m. PDT: Is tablet eventually going to replace laptop, Walt asks.

7:07 p.m. PDT: Jobs: “When we were an agrarian nation, all cars were trucks because that’s what you needed on the farms.” Cars became more popular as cities rose, and things like power steering and automatic transmission became popular.

7:07 p.m. PDT: “PCs are going to be like trucks”

7:07 p.m. PDT: “They are still going to be around…they are going to be one out of x people.”

……What do you read into “PC?” I have not doubt its no just a comment about the competing computer platform.

>>Apple are pushing all their applications to 64bit and to Cocoa. Final Cut Pro has a harder-than-most development path because of the history (cross platform app to OS 9 to OS X to Intel and now to Cocoa and 64bit).<<

Hard? They only need to do a Mac version and they have access to OS X engineers… In that time Premiere and others, like this little app, Adobe Photoshop went cross platform OS 9 to OS X to Intel and now to Cocoa and 64bit. Apple is now proven to be the "lazy" company
🙂

Adobe didn’t have to write Mac code, it’s the same code in a cocoa wrapper. All Adobe code is core. Adobe don’t use any Apple Frameworks, FCP will need to; And so on. Photoshop had the same difficulties that FCP has had, but didn’t need to be rewritten, because the core has never been truly native on any platform. That does make it easier. Photoshop is still mostly Adobe core, with a Cocoa interface wrapper developed by Adobe that is not the standard OS X Cocoa interface.

And if you think FCP team has any better access to the OS X engineers that Adobe then you don’t know Apple’s internal workings that well. 🙂

Philip

Great read and totally agree. Apple have too much of a user base for pro apps to just dumb down the apps. It doesn’t make sense and AI are just trying to get clicks (to which they succeeded). Final cut is why I originally brought a Mac and I have never looked back and now I run 2 companies with rely on the Mac. They really changed my life and Final Cut is a huge part of that. I am really looking forward to upgrading to the new version when they finally release it. I have skipped FCS 3 in anticipation of the FCS 4 or what ever they call it.

Keep up the good work.

Like it or not Apple caters to the professional market as a courtesy for the most part. Apple sells hardware and lots of it. Most of it to the consumer market and at a much higher profit than their professional apps.
I would like to think they are not going to leave thousands of professional users dangling but money is money.

Hi Philip..I do remember the exiting 90th as well

I would like to see the new FCPRO (Cocoa) supporting:

64 bit – – OpenCL , and GPU support for ATI HD 5xx…6xxx cards.

If not , I dont see any future for this app.

I’m not sure, you’ll have to ask AppleInsider about that. I see that I was pretty close to 80% right about FCPX and it’s professional editing application. Sure it’ doesn’t suit a tiny niche of people who like to think of themselves as the only Pro Editor’s but in reality they never made up more than 2.5 % of Apple’s professional editing customer base. Editing has changed away from the niche as you’d know if you were a regular reader.

Thanks for your trolling comment.

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