On the most recent episode of The Talk Show, John Gruber and Dan Benjamin discussed the release of Final Cut Pro X. Above all, they were asking the question: why is Apple in this market? Why does Apple spend money producing professional grade video editing software, conducting full extensive rewrites of apps like Final Cut that make up a tiny percentage of their total revenue, when they are, fundamentally, a consumer hardware company?
I think the answer to this question can be traced back to the 1997 Boston Macworld Expo. That event marked Steve Jobs’ first public presentation on behalf of Apple since returning to the company after a 12 year absence. In fact, Jobs announced that he was officially joining the company’s board as part of the keynote.
The 1997 keynote is best remembered for the boos Steve received upon announcing a partnership with Microsoft that would guarantee the presence of Office on the Mac. However it’s real meaning — and the answer to the question of Final Cut Pro — lies in the strategy that Jobs articulated for Apple’s recovery. In describing that strategy, Jobs spelled out how Apple imagines the core market for the Mac, the role the pro apps play in servicing that market, and how Apple could expand from that market out to wider competitiveness.
In retrospect, 15 years on, this keynote hints at exactly the map that Apple has followed to its current explosive success.
The relevant portion of the keynote starts at 18:50 in the video when Jobs begins his description of Apple’s “market focus”.
“The question is: where is Apple relevant? Where is Apple still the dominant player? Which market segments? And there are two. The first one I call ‘creative content’: publishing, design, prepress, etc. It’s creative professionals using computers. And Apple is still the dominant market leader for creative professionals by far.”
Jobs goes on to site statistics: the Mac represents “80% of all computers used in advertising, graphic design, prepress and printing” and “64% of Internet websites are created on Macintosh”. However, before Steve’s return, Apple had been failing in this market:
“We haven’t been doing a good enough job here. As an example, something like 10-15% of Mac sales can be traced back to people using Adobe Photoshop as their power app. When was the last time you saw Adobe and Apple co-marketing Photoshop? When was the last time we went to Adobe and said, ‘How do we make a computer that will run Photoshop faster?’ These things haven’t been as cohesive as they could’ve been and I think we’re going to start proactively focusing much more on how we do these things.”
The core of Apple’s Mac business in 1997, according to Steve Jobs, was creative professionals, people who make media on the computer as part of their living. While the last decade since the advent of the iPod has seen the Mac become an ever-dwindling percentage of Apple’s total business, I think this is still the soul of the market for Macs: people who use their computers to make things. During that time those things have evolved from print designs to websites and iOS apps and as multimedia has become ever easier to work with they’ve grown to include music and movies as well.
Now, there’s an obvious objection to this as an argument in defense of continuing to make Final Cut Pro. Apple has another app that allows creative-types to make video content: iMovie. If the logic for going after movie makers and musicians is the same as that for serving designers and publishers, then why aren’t iMovie (and GarageBand for that matter) good enough? After all, Apple has ceded the market in professional print and web design tools to Adobe and others. Why continue to make Final Cut Pro and Logic, Apple’s professional grade movie and music creation tools?
I think the answer has to do with aspiration.
While there are many more creative professionals who do visual design than create music or movies, music and movies are the media that have the strongest imaginative and emotional hold on all creatives. How many designers do you know that aren’t serious music fans or even amateur musicians? How many don’t love movies and even fantasize about making one themselves someday? Even Gruber and Benjamin take a major segment out of each episode of The Talk Show to discuss their obsession with the Bond movies.
While very few of these designers may go on to actually record albums or create movies, they want to know that they could if they decided to. Their self-identity, and especially the part of it that aligns itself with Apple, includes the sense of these things as within their possibilities. If they knew that they’d have to switch away from the Mac in order to get serious about these dreams, that would have a dramatic impact on their relationship with Apple.
Further, many of these creatives are, to a greater or lesser degree, not yet fully professional. They might be corporate code monkeys who play in a band in the evening or contract designers who are working on their own screenplay. As such, they are obsessed with what professionals in their industry of aspiration do and they take their cues on tools from them. So, seeing features about Walter Murch editing the new Coppola film in Final Cut Pro, for example, have a big impact.
Accessible tools clearly intended for amateurs like GarageBand and iMovie don’t satisfy this aspirational fantasy. You don’t want to imagine cutting your first indie feature in the same tool your uncle uses to edit home movies of his kids.
Unlike in graphic design where the Adobe suite is the de facto industry standard, their aren’t obvious replacements for professional editing and recording on the Mac in the absence of Final Cut Pro and Logic. Adobe treats Premiere as a relatively low priority; Avid and Pro Tools are orders of magnitude more expensive and involve complex hardware integration (pulling them outside of the realm of an aspirational purchase).
In order to keep the dreams of creative professionals alive, Apple has to keep making Final Cut Pro and Logic.
Creative tools + Education = Media Players
But what about that second market Steve mentioned back in 1997?
“The second market, one that’s very close to my heart, is education. Apple put the first computers in education. Apple did it again with the Macintosh. And Apple is still the dominant leader in education. Now I’m going to ask you a question: who is the largest education company in the world? The answer is Apple. Apple is the single largest education supplier in the world.”
Just like for creative professionals, Jobs cited impressive stats: “60% of all computers in education are Apples”, “64% of all computers teachers use” are Apples.
But what does education have to do with Apple’s strategy in the last 15 years? Apple’s big successes have been in media; what does education have to do with that? The answer is: the youth market.
Before the rise of mobile devices and the major fall in computer prices since the 90s, how many young people owned their own computer before college? Educational institutions, either in the classroom or the dorm room, are the site of most kids’ first computer experience. By committing to making great computers for education, Apple was really committing to making computers that kids, and especially teens and college kids, liked.
One of the main things that teens and college kids like to do with their computers is listen to music and watch movies. The iPod arose out of the attention Apple paid to this market. Apple knew what young people wanted to do with technology, it knew exactly how to sell it to them, and it had a brand they respected and understood, all because of its long-standing involvement in the educational market.
And Apple had deep technical expertise about media because of their work on creative tools. They had Quicktime and extensive knowledge about media decoding; they were deeply involved in the definition of codecs. Out of the combination of this media expertise with their knowledge of the youth market came the iPod and everything it has yielded.