Is Apple Abandoning Creative Professionals?

For years, creative professionals have relied on Apple (Nasdaq: AAPL  ) desktops as their go-to tool. However, the company hasn't updated the Mac Pro -- the company's top-of-the-line workstation -- in more than a year, and rumors are beginning to surface that the content-creation industry may soon lose its favorite computer.

The pros need the Macs
Although the iMac and Mac Mini could work for some graphic designers, they simply won't work for resource-hungry applications like professional video production and scientific computing. According to ars technica, power users need features like dual multi-core processors, room for reality-bending quantities of RAM, space for PCI express cards, and the ability to swap out components with relative ease. If Apple kills the Mac Pro, then those users would have to seek out rigs that offer these features, even if that means switching over to Microsoft (Nasdaq: MSFT  ) Windows-based systems.

But Apple doesn't need the pros
Unfortunately, the Mac Pro represents an increasingly small portion of Apple's total sales. The iPhone accounts for nearly half of Apple's total, and combined, iOS devices make up 70% of sales. Although fourth-quarter Mac sales grew 26% year over year, the make up only 22% of total revenue. What's more, desktop sales -- which were led by the iMac -- brought in only 6% of revenue.

In short, Apple, in a loose sense, has become a consumer-products company that happens to sell computers. Now that the company has found mainstream success, it's gearing more of its products toward the consumer market. Earlier this year, it angered video editors when it stripped important features from Final Cut Pro -- its professional editing suite -- to bring the price down to more consumer-friendly levels.

You can probably see the most evidence of Apple's focus on the consumer market in its latest OS, Lion. Launchpad is designed to look and feel like iOS, and the default scroll settings mimic scrolling on an iPhone.

The potential winners
If Apple does decide to focus solely on the consumer market, it would create opportunities for PC manufacturers such as Hewlett-Packard (NYSE: HPQ  ) or Dell (Nasdaq: DELL  ) . Either one could step up to fill the high-end workstation space once the last round of Mac Pros starts to die. On the software side, Adobe (Nasdaq: ADBE  ) -- which already saw a boost in sales of its video-editing software after the Final Cut Pro debacle -- and Avid Technology (Nasdaq: AVID  ) could capture Final Cut's market share.

If you'd like to follow this story as it evolves, I'd recommend keeping an eye on Apple, but paying closer attention to its competitors. It seems pretty likely that Apple will continue to sell iOS devices by the boatload and can survive without the professional market. However, the competition's mad scramble to snag the customers Apple leaves behind could create interesting investment opportunities. Add these companies to your watchlist and stay up to date on all the latest news:

The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft, Dell, Apple, and Adobe Systems, creating a diagonal call position in Adobe Systems, and creating bull call spread positions in Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Patrick Martin owns no shares of any of the companies mentioned here. You can follow him on Twitter, where he goes by @TMFpcmart03. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (12) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 06, 2011, at 5:00 PM, H3D wrote:

    Is Motley Fool abandoning analysis?

    It seems so.

    There are more hits in rumour mongering.

  • Report this Comment On November 06, 2011, at 5:06 PM, KTWalrus wrote:

    I think Apple should consider licensing Mac OS X for Desktop & Servers to others like HP and Dell and stop making Mac Pros altogether.

    Apple should certify certain HP and Dell models for running Mac OS X (whatever hardware that they want to submit for certification) and then charge $99 for the initial OS install. I believe this would expand Mac OS X market share greatly while not affecting their push in the mobile computing space.

  • Report this Comment On November 06, 2011, at 5:34 PM, theHedgehog wrote:

    Yes, there is a smallish hardcore of Apple users who would like to see OSX on Desktops & Servers, but in the ABM (Anything But Microsoft) world, killing off Linux would be an uphill battle. Mac users buy Macs so they don't have to get their hands dirty. Like Apple says "It just works". It doesn't always work so well with random bits of hardware like you find in a custom built ABM PC.

  • Report this Comment On November 06, 2011, at 5:49 PM, bjcbjc wrote:

    I agree completely with KTWalrus.

    OSX is a stable, mature operating system that has been proven by the hacker community to work very well on a variety of hardware.

    If Apple were to release a version of OSX that works on specific Intel-based hardware they could capture a decent percentage of the desktop market, and make up for abandoning me and my fellow creative professionals.

    By removing Expresscard slots from nearly all of their portables and refusing to support USB3 or Esata, Apple has made life very difficult for anyone who needs to deal with digital cinema footage or professional photography.

    As a heavily-invested Apple shareholder, I would like to see OSX offered at a reasonable premium to Windoze - perhaps $200 initial and $99 per year for support/upgrades.

  • Report this Comment On November 06, 2011, at 9:26 PM, G44ca wrote:

    Apple doesn't need the pros?

    While the Mac Pro represents an increasingly small portion of Apple's total sales, the iPhone accounts for nearly half of Apple's total, and combined, iOS devices make up 70% of sales Apple still needs the Mac. Fourth-quarter Mac sales grew 26% year over year, and now account for over $23B in yearly revenue. What's more, desktop sales alone -- which were led by the iMac -- brought in 6% of revenue – which is more dollars than the entire company brought in in 2003. Apple doesn't need the pros? I completely agree with the comment by H3D:

    "Is Motley Fool abandoning analysis?

    It seems so.

    There are more hits in rumour mongering."

  • Report this Comment On November 06, 2011, at 9:53 PM, H3D wrote:

    This year apple put 10Gbps on its Pro notebooks.

    That is there for those creative professionals you were asking about. A quad core processor and serious IO isn't for Word or Excel.

  • Report this Comment On November 06, 2011, at 10:32 PM, gslusher wrote:

    "However, the company hasn't updated the Mac Pro -- the company's top-of-the-line workstation -- in more than a year..."

    That is normal. Apple doesn't update the Mac Pro line as often as their other lines, in part because there isn't as much to update.

    @G44ca:

    "What's more, desktop sales alone -- which were led by the iMac -- brought in 6% of revenue..."

    I expect that most of that is from iMacs and Mac Minis, rather than Mac Pros.

  • Report this Comment On November 07, 2011, at 12:35 AM, btblomberg67 wrote:

    THis article fails to mention that ll 2011 macs (iMacs and Laptops include Thunderbolt O/I which can interact with PCI card chassis at PCI speeds (or faster) offering all the features Mac Pro users get in the tower as an add on to lesser quad core machines. So your quad core MacBook Pro can be your Mac Pro with a Thunderbolt Add-on, but you can take it with you for other work. That is more likely where things are headed.

  • Report this Comment On November 07, 2011, at 2:18 PM, Olmstone wrote:

    There are so many things wrong with this article it is hard to know where to start. You know Avid hasn't made a net profit in over 4 years and has continued multiple serious layoffs -- 200 senior people even the week before they announced MC6? Right?

    And did you read the Adobe announcement that started your bogus narrative boosted by tweets? I did. Adobe said "their video content tools" that means the Creative Suite which no one buys for Premiere. And since they dropped the price of Premiere 50% and only saw 22% growth YOY (the 45% is misleading to quote alone since it is 45% of 22%) -- they apparently lost lots of money on the deal.

  • Report this Comment On November 07, 2011, at 7:05 PM, pmart wrote:

    @H3D and G44ca, Despite what Apple says about Thunderbolt, I doubt you'll find many professional video editors who could trade down to an iMac or Mac Book Pro.

    @gslusher, True, but the refresh cycles keep getting longer, and Apple's not talking much about the product.

    @Olmstone, I didn't recommend buying Avid or Adobe. I just said they might be worth watching as this story line plays out. Also, the story that started my narrative was the release of FCPX, not Adobe's reaction.

  • Report this Comment On November 07, 2011, at 9:46 PM, MHedgeFundTrader wrote:

    Analysts continue to be stunned by the rate at which cash is rolling into Apple (AAPL). At current cash flows, the company’s hoard is expected to grow from $81 billion to $120 billion by next June, an increase of nearly $200 million a day!

    Let’s face it. Apple has had a great, decade long run. Hundreds of my readers, many of them Apple employees, are faced with the enviable problem that, having ridden the stock up from $4 to $400, they have too much of their wealth concentrated in a single asset. That is never a good idea from a risk control point of view. But every time I look for reasons to sell Apple, I find three more reasons to buy it. It’s a case of the grass being greener on my side of the fence.

    It all reinforces my view that Apple shares will reach my long term target of $1,000 sooner than anyone thinks. It is already trading places with Exxon (XOM) as the world’s largest company and most profitable company on an almost weekly basis. At $1,000, Apple would boast a market value of $930 billion, accounting for 7.5% of total US stock market capitalization, and 40% of NASDAQ.

    What if multiples expand, as they should? Take Apple stock up to its past peak multiple of 36, and the company would be worth $2.8 trillion and rank 5th in the world in GDP, more than France, and just behind German. Wow!

    The Mad Hedge Fund Trader

  • Report this Comment On November 11, 2011, at 11:47 AM, MassiveB2 wrote:

    I think what's missing in this article and conversation is the reality that the hard lines between "Consumer" vs. "Professional" are being blurred more and more everyday. And Apple's moves are a reflection of that, if not helping cause this technology blur. Just look at Canon's massive blended move into the prosumer market with its EOS DSLR cameras that are being used by both consumers and professionals for video and film work. Same with RED and its cameras to a degree.

    As a content creating professional myself, I'm excited by Apple focusing on providing tools for me for content creation, like the new Thunderbolt I/O, that are simply what they are and can be used for either or both consumers and professionals. I think Apple is focused on the REALLY BIG PICTURE, which is that we are all ultimately consumers of good products that we can use for whatever it is that we want in our personal and professional lives. We don't need to label things as "pro" or "not pro" anymore.

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