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Last Call for Final Cut? Part 1

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Apple (Nasdaq: AAPL  ) unleashed a storm of anger across the professional video world last summer when it released the replacement for its popular Final Cut Pro editing program. (For examples of the negative reaction, go here.) This article is the first of three that will go over what happened and what it may mean for Apple and its two main rivals in the realm of video editing.

Change may not be for the better
The problem with Apple's new program, dubbed Final Cut Pro X, is that instead of being an improved version of its predecessor, it actually became less useful. It dropped features that video professionals had come to rely upon, and its drastically reworked interface forced editors to learn a new -- some pros have called "unwieldy " -- way of editing. As a final twist of the knife, FCPX can't open projects edited in FCP.

Final Cut Pro X -- which sports a much lower price to go along with its shortened features list -- seems to signal a sea change in Apple's attitude toward its professional customers. The new demographic goal appears to be a larger pool of amateur and semi-pro users who had grown beyond Apple's iMovie editing program (which is included with each Mac) but had found Final Cut Pro too complex and expensive.

A smart move?
That decision may, indeed, prove to be the right one for Apple. It's hard to argue with the company's enormous success selling consumer-oriented devices, such as the iPhone and iPad. So selling millions and millions of a prosumer program like FCPX at $300 each would certainly seem to be more profitable than selling fewer copies of a more expensive fully-featured professional program at $1,000 a pop.

But that's assuming that the number of Final Cut Pro users is relatively insignificant; however, I wouldn't call 2 million an insignificant figure. That's the number of Final Cut Pro installations that Apple owned up to last April at the National Association of Broadcasters convention, a number that hadn't yet peaked. FCP was then growing at a 15% rate compared to 7% for the rest of the nonlinear editors. Apple has not released any FCPX sales figures.

At the crossroads
The abandoned video production companies, educational studios, and individual editors who have invested hundreds of thousands or even millions of dollars in software, equipment, and training for FCP are faced with a huge decision: should they wait for improvements to FCPX, which Apple claims are forthcoming, or should they change editing platforms and go with one that meets their needs now?

The two most likely alternatives to Final Cut Pro X for the professional editor are Avid's (Nasdaq: AVID  ) Media Composer and Adobe's (Nasdaq: ADBE  ) Premiere Pro.

Avid has been around since the early '90s, was a pioneer in nonlinear editing, and  once owned the lion's share of the nonlinear editing marketplace -- until Final Cut Pro dethroned it in the early 2000's. Avid is still king, though, in the feature-film-editing stratosphere.

Adobe Premiere, has been around almost as long as Avid, but did not start getting looked at seriously until the Pro version came out in 2003. Since then, it's slowly been gaining devotees, but has not yet widely caught on at the higher levels. That may change quickly, though, as the FCPX fallout forces more editors to give Premiere Pro's features a closer look.

Soon after the release of FCPX, Avid and Adobe capitalized on the uncertainty surrounding the future of Final Cut Pro and Final Cut Pro X by offering steep discounts to Final Cut Pro users wanting to switch.

Opportunity knocks
Apple, Avid, and Adobe are very different companies. Apple has gotten so big as a consumer hardware and software company, it may not even notice a bunch of professional editors moving away. Avid, though, is a company whose market is primarily made up of video and audio professionals. A "small" Apple loss here could be a big gain for Avid. Adobe, too, is focused primarily on the media professional, not only in video, but also in photography, Web design, illustration, and publishing. A gain in the video editing world has huge cross-promotional potential for Adobe's line of media tools.

What about the hardware?
There is a risk that Apple is taking that could prove to be more painful than they realize. Final Cut Pro and Final Cut Pro X are programs that run only on Apple computers. Avid's Media Composer and Adobe's Premiere Pro can run on Windows PCs or Macs. So why should editors switching from FCP stay loyal to Apple hardware? Computer companies like Dell (Nasdaq: DELL  ) and Hewlett-Packard (NYSE: HPQ  ) could get a lift from a group that would not have given switching hardware a second thought before. Apple may seem to be shifting into a phone and tablet computing company, but still, losing laptop, desktop, and workstation revenue would not be painless.

Checking the pulse
I've been thinking about these issues since Apple released FCPX six months ago, and I wanted to find out if Avid and Adobe have been able to take advantage of the opportunities dropped in their laps. For part two of this series, I interview Ron Greenberg, Sr., the Senior Vice President of Worldwide Marketing for Avid. And I speak with Mark Raudonis, the Senior Vice President of Post Production at Bunim/Murray Productions, about why his company decided to move from Final Cut to Avid.

Part three will be Adobe's turn. I speak with Bill Roberts, their Director of Video Product Management, and then with Erik Horn, the Creative Director of Arts+Labor, an Austin, Texas-based production and marketing company that made the switch from Final Cut to Premiere Pro.

To make sure you don't miss parts two and three, follow me on Twitter at @TMFRadovsky.

Apple obviously has made large profits from its iPhones and iPads, but investors shouldn't overlook those companies that supply the chipsets and other bits that Apple, Samsung, Motorola, and the other phone and tablet makers need to produce their devices. For an inside look at three such companies that The Motley Fool's analysts think are good bets, get this special report. It's free!

Fool contributor Dan Radovsky has no financial interest in the above-mentioned companies. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Dell, Apple, and Adobe Systems; creating a bull call spread position in Apple; and creating a diagonal call position in Adobe Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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 (4) | Recommend This Article (4)

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 January 26, 2012, at 10:17 AM, Recent1 wrote:

    This article is just like 4 other articles on the web within the past month. It's tiring, tells us nothing new and is basically poor blogging. I didn't learn one thing from this article...yes I did, I learned it's just like 4 other articles on the web, stating the same thing over and over and over again. It's real apparent that he knows little about the FCPX program when he compares it to iMovie, another cliche we see time and time again in other articles. Look, if you're going to write on the web then become insightful and use detail. What the author failed to mention is new media and delivery of product and intent and statistical viewership of that video and what people they are watching in regards to the product. who is making that product and how are they making that product. He never mentioned portability of device and how that influences what people watch and the product and who is making that product.

    Here you go everyone, read articles just like this and learn nothing - enjoy the repetitive blogging

    Want more, I can give you a whole list

  • Report this Comment On January 27, 2012, at 1:53 PM, Recent1 wrote:

    Here, want to really learn something instead of reading these empty articles by this author

    Watch this and really learn something

  • Report this Comment On February 05, 2012, at 10:32 AM, SteveHullfish wrote:

    Only two mistakes I can see in this article. Avid first debuted and started selling working systems at the 1988 NAB (National Association of Broadcasters). There are probably plenty of articles and ads in magazines for Avid in the 80s, as opposed to the early 90s as this author states.

    And I don't think Adobe had a version of Premiere even close to the early 80s. I don't think there was a version of Premiere until the late 90s, maybe, but my history of Adobe is sketchy.

  • Report this Comment On February 06, 2012, at 4:59 PM, HMungus wrote:

    FCP, Adobe & Avid all mainstream in the changing marketplace you discuss, but one NLE suite that seems to go under the radar is Media 100. I haven't used it but we are all familiar with what comes out of BorisFX and by all accounts I have heard that Media 100 is very good... Comments??

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