Adobe Systems (Nasdaq: ADBE) has been in the forefront of developing many of the standard programs used in document authoring and publishing, web design, Internet animation, and photography. But one aspect of content creation that the company has not been able to take the lead in has been professional digital video editing.
Now Apple (Nasdaq: AAPL) has given Adobe an unexpected opportunity to finally make a splash in that world. The poorly received release of Apple's Final Cut Pro replacement, Final Cut Pro X, has brought on the real possibility of Final Cut Pro users searching for a replacement editing system. Adobe would like it to be their system, Premiere Pro.
Some background
Avid Technology (Nasdaq: AVID) was a pioneer in the digital editing field, bringing out its Media Composer nonlinear editing system in the late 1980s. That system quickly became the de facto standard for professional video and film editing, but unfortunately for Avid, Final Cut Pro grew dominant in the early 2000s and seemed secure ... until now.
Adobe is aggressively taking advantage of Apple's wrong-headed Final Cut Pro X release by offering huge discounts to Final Cut Pro users who switch to Premiere Pro. That program has had its devotees since its introduction in 1991, but before the recent worm-in-the-Apple debacle, it seemed unlikely that Premiere Pro could be a serious threat to Final Cut Pro.
Apple's loss of the relatively small subset of professional Final Cut Pro users probably won't take a noticeable bite out of its bottom line. But Adobe, a company with only 5% of Apple's market cap, could experience a much larger impact. And Adobe can't ignore the halo effect of integrating Adobe's many other programs into the Premiere Pro workflow.
Avid, too, is drooling over regaining the market share that it once saw as its birthright. Its editing system is still a well-respected editing standard even though the company has been losing money since 2005.
Apple has unlocked the door. Which company will get its foot in first? Keep tabs on the outcome by putting them on your Watchlist.
