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Technology Stocks : Avid Technology

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To: Alfred W. Post who wrote (78)12/30/1996 12:55:00 PM
From: David Kuspa   of 777
 
Alfred, I neglected to mention the strategic factors in the nonlinear editing industry as we move through 1997. Avid has been selling $60-$100k turnkey systems to the professional post-production market for many years now. And if you have a post-production environment where clients are looking over your shoulder, and you need a large stable of qualified free-lance editors, then I believe Avid is still the best choice. However, I think this market has become fairly saturated. Avid will have a tough time selling systems at this lofty price-point in the coming year(s).

There are already too many other viable competitors that are offering complete packages at $20-50k. And the price of producing professional quality video on the desktop has fallen to as low as $10k for a complete system, including computer. True, the software won't be nearly as refined and feature laden as Avid, and your output won't be "real-time" (you'll have to render all effects like dissolves, and probably the entire program when you're done editing), but if you can work within these limitations, you can still output betacam SP, broadcast quality video. And one thing you won't have to come up with is the many thousands of dollars in additional maintenance costs (support, software upgrades) each year that goes with owning an Avid.

Don't misunderstand, I still prefer and use Avid Media Composers exclusively in my own work. I rent an Avid on a weekly basis whenever I have the work. But I am just biding my time until I can purchase my own nonlinear system at a much lower cost. And the price pressures on Avid will be even tougher in 1997. If they can't make one penny on their sales under their current business model, they have even less of a chance to do so in the near future as newer, better, cheaper systems become more readily accepted. For every post-production house out there with an Avid system, there are legions of freelance producers or directors like myself who would buy their own nonlinear systems at a lower cost of entry. That is where the market is headed, and Avid still derives the lion's share of its operating profit from sales of its (high price point, higher margin) Media Composer line.

Also DV (Digital Video) that has come out in the professional versions (Panasonic's DVC Pro) and that is just now starting to come out in consumer products (it will replace VHS eventually) will have a significant impact on the nonlinear desktop industry. Since DV is already a compressed digital format, it can literally be streamed right onto a standard hard drive via Firewire, eliminating the need for expensive video digitizing/compression cards. And once you are finished editing the DV material with nonlinear editing software of your choice, you would output the digital stream right back into the camera or a DV deck, again, without suffering the generational or compression artifacts of today's nonlinear systems. Digital to digital quality throughout. And DV can be very inexpensive compared to the professional formats like Betacam SP. Lots of exciting changes happening in my industry, and the cost of video production/post keeps going lower while the quality and capabilities are improving dramatically.

Good luck,
D. Kuspa
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