Friday, February 08, 2008

Avid & Apple Withdraw From NAB--What Does it Mean?


Earlier this week, Apple confirmed the rumors that it’s not going to exhibit at NAB this year. This comes on the heels of Avid’s announcement that it would pull out of this year’s show. Both announcements spawned a variety of speculations about the reasons behind their departures; said speculations will now be added to by myself.

To me, Avid’s announcement that it’s withdrawing from NAB is far less important than the announcement of the company’s new Chairman and CEO, Gary Greenfield. Here’s Mr. Greenfield’s bio, from the press release announcing his appointment:

“Greenfield has been CEO of GXS since 2003, a leading worldwide provider of business-to-business integration, synchronization and collaboration solutions. Since December 2003, he has also been an operating partner with Francisco Partners, a leading technology-focused private equity firm.

Previously, he served as CEO of Peregrine Systems where he managed the restructuring of their business; president and CEO of MERANT; and while CEO of INTERSOLV, they merged with Micro Focus to form MERANT. He has experience growing businesses both organically and through acquisition, managing development, marketing and operations, and serving diverse customers from small businesses to the Fortune 500.”

I don’t see any experience with audio or video production or post-production in his background; in other words, he doesn’t know the company’s business. He does, however, know how to restructure businesses. My bet is that he’s going to split up the company and sell pieces to the highest bidders. Yamaha or Roland would be potential bidders for Digidesign and M-Audio, Creative Technologies might snap up M-Audio and/or Pinnacle, and Sony might take all three. As for Avid, I think that Sony, Thomson or Harris are the most likely bidders.

The speculation that Avid might buy Apple’s media products, or anything else, is silly under the circumstances. They’re trying to clean up the company as a result of previous acquisitions that made little sense (Pinnacle being the best example), as well as failures to deliver promised products; acquiring yet more products would be counterproductive.

Apple’s move to exit NAB is more interesting. A company spokesperson stated that the company’s decision was made, in part, because it has a very effective way of reaching users through its Apple stores. I think that’s one reason, but I also think that exiting NAB allows Apple to change its development schedule to better fit reality. There doesn’t necessarily need to be a major new version of Final Cut Studio every year; features can be added and bugs fixed incrementally. I believe that Apple is fully committed to being in the media creation tools business; the company’s success, especially in the video field, has been at the expense of both Avid and Adobe.

At one time, I thought that Apple might purchase a video or audio hardware company to better compete with Avid; both AJA and MOTU were potential candidates. However, I think that Avid’s failure indicates that Apple has the correct strategy right now: Stay out of the hardware business, and support the most popular products out there.

I’d bet that twelve months from now, Avid will either be a much smaller company or only a brand name within another company’s product portfolio, and Apple will still be in the media creation and post-production business with its suites of video and audio software.

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