Apple (Nasdaq: AAPL) may not care all that much if it loses the professional video-editing market following the launch of its controversial Final Cut Pro X program, but there are two companies that see that segment as important to their bottom lines. Adobe (Nasdaq: ADBE) and Avid (Nasdaq: AVID) are moving quickly to entice video editors to jump from Apple's Final Cut Pro to their own video-editing programs by offering huge discounts to potential switchers.
Earlier this month, Adobe announced a 50% discount on its Premiere Pro software to Final Cut Pro users, and Avid has recently brought back a 60% price break on its Media Composer program for Final Cut switchers. Avid originally had the offer beginning in April and ending on June 17, but it's taking advantage of this new opportunity and has announced that the discounts have been reinstated.
How important is this market?
Apple would hardly notice if it lost the professional video-editing market. Its 2010 software sales accounted for only 3.9 % of total revenue, and that includes all of Apple's software; it doesn't break out Final Cut Pro sales figures, which would be a small percentage of the total software number. But for Adobe, which offers a wide range of media-authoring programs geared to the professional, having more users for Premiere Pro means enjoying more opportunities to get those new users buying into the entire Adobe product workflow.
As for Avid, whose video-editing software is its core product, Apple has unwittingly thrown the company a life preserver. Avid has been foundering and hasn't turned a profit in the past five years, so this play for ex-Final Cut Pro users is of the utmost importance. It could also give Avid more than just a financial lift. Avid was the nonlinear-editing innovator in the early 1990s, and its Media Composer was that market's leader until losing out to Final Cut Pro in the early 2000s. Seeing that situation reversed would be sweet indeed for Avid.
Will the switching offers work?
For professional Final Cut Pro editors who are just starting out or moving into the middle tiers of the video-editing world -- the largest segment of that market -- these offers from Adobe and Avid may very well have an effect. But in the upper strata of the profession, which Avid still mostly still holds, probably not so much. Editors there who are using Final Cut Pro will probably decide to stick it out with the older version 7 and not make the change to Final Cut Pro X yet, if at all.
As Academy Award-winning feature-film editor Kirk Baxter, editor of The Social Network, told Entertainment Weekly: "I assume I'm going to be working on Final Cut 7 until they upgrade the new model to professional standards, and if they don't do it, then I imagine all of us will end up aborting and finding a new platform to work on."
Avid and Adobe are certainly hoping that happens.
To keep an eye on what all of this means for Avid, Adobe, and Apple, add them to your Foolish Watchlist.
- Where the Money Is: August 22
- 4 Stocks Making Moves
- 4 Stocks Making Moves
- What Does Wall Street See for Apple's Q3?
- 4 Stocks Making Big Moves
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 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 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.