Apple Bows Out of NAB 2008

Ron Lindeboom Paso Robles, California ©2008, CreativeCOW.net

FOLLOWING AVID's LEAD
When Avid sent up a highly public announcement on November 13, 2007 stating that they would not have a booth at NAB 2008, some incorrectly concluded that the decision was based on:

1. Finances. "They're in trouble," said some. "That's the real reason for Avid's move; they're out of cash and bleeding fast. Here's the proof, they're leaving the industry's most important showcase to Apple."
2. Inability to compete. "They are finally admitting that they can't compete with Final Cut. If they had anything worth showing, they'd go. This proves there's nothing there."

Against this flawed line of reasoning, we argued these kinds of musings were wrong and we spelled out some of the reasons in an article that argued why both of those viewpoints were far from accurate. The truth is, Avid -- and now Apple, months later -- bowed out for the same kind of sound financial reasons that Sony had used years back when they eschewed the Comdex expo. Sony doesn't lack the cash to attend a show like Comdex and they aren't going away. Neither is Avid. But the backlash each company took in the wake of their decisions was enormous.

Now Apple is gone from NAB 2008 but the user ire over this move seems relatively nonexistent and in stark contrast to the public flogging of Avid for its NAB announcement (and Sony for its past exit from Comdex), Apple seems to have once again defied the odds and come out of its announcement largely unscathed.

In this article, we'll do two things:

1. We will explore some of Apple's latest moves, and
2. afterwards, let's look at some of the real factors that are causing companies like Avid and Apple to lay aside their plans for major events like NAB in favor of using other, more cost effective means of reaching their customers.

The market is changing and Avid and Apple are now the first of what we suspect will be many companies that eschew trade shows as a means of reaching customers. Yes, Avid and Apple may be the first but they are surely not going to be the last.

APPLE WHISPERS ITS NEXT MOVE
How did Apple avoid taking the public flogging that greeted Avid following its announcement a few months earlier? First, Apple let Avid be the pioneer and as the old adage goes: "It's the pioneers that catch all the arrows."

Next, instead of the kind of industry-wide highly visible announcement made by Avid, Apple opted to issue the news in a short statement leaked to TV Technology's website on February 7, 2008. The magazine is one of the industry's smallest circulation trade magazines and its web presence is far smaller still, according to the web-traffic stats compilers like Alexa.com, TrafficEstimate.com and others.

Set in musical terms, Avid's announcement was like a Phil Spector "wall of sound" production, while Apple's leaking of their news was akin to an indie music release on CD Baby. The former gets real airplay, while the latter you have to dig to find.

Avid leaked their news in a mainstream press release that spanned all the major media and even granted Creative COW an exclusive interview regarding Avid's decision to leave NAB 2008. In contrast, Apple chose the vehicle that many feel to be the avenue that would have arguably the least impact.

TV Technology's subscribership is largely made up of the very readers who, for the most part, are not the people that frequent the Apple booth -- or the other booths that make up "Multimedia Alley" in the South Hall Lower at NAB -- with its core readership drawn from the users who frequent the satellite uplink displays and the other heavy broadcast hardware that most FCP users would walk right past without a glance.

So...

What was Apple thinking in handling this important announcement in this way? I don't pretend to know all the answers but once again I have to "take my hat off" in homage to Apple's PR and marketing machine. It was a move that made the news public by taking the edge off of it and causing the least amount of backlash to Apple. Why? Because the ones to whom the news was released were those that have historically had the least stake in Apple's showing or not showing at NAB.

SOME ARGUE: AVID IS IN TROUBLE, APPLE IS NOT
A common idea presented by some in the ongoing debate is that Avid pulled out because they don't have the money, while Apple pulled only because they wanted to. This is quite a stretch for me and many of the same people that assailed Avid -- with a sense of skewed moral outrage that a company could excuse itself from wanting to spend facetime with its users -- were void of this moral outrage when it's Apple refusing to take part in the dime-a-dance romance. There was little "outcry in kind" from many of the Apple users who so vociferously maligned Avid for its announcement.

Oddly, when it's Avid bowing out, it's because Avid is in trouble. In support of their position, people point to the lay-offs that Avid had a year or so ago. But I can't think of a single company in this industry of whom the same thing couldn't be said. I get letters almost daily from associates and friends from most all the companies in this industry that write me and ask if I know anywhere that they might find an opportunity.

Apple is no exception in this category and I know plenty of people that once worked at Apple and are recently gone. Many are from the teams that make the Pro Apps that many members of the COW use. NAB 2008 was to be the year of the long ago announced and equally long awaited "Ultra Shake" compositor. But I am willing to bet that we won't see it by the end of the year. From what I have learned, most all of the developers are gone and if they want to ever release it, they'll have to build a whole new team. If they have, I have heard little of it and this kind of silence for a previously announced product does little to arrest the growing suspicion that the product is likely to become the latest Apple "no show."

Just what did happen to Final Cut Server, anyway? Final Cut Server was announced with great fanfare at last NAB 2007's mega Apple press event. But it still hasn't shipped and from the people I know, I'd say that there's a great chance that it won't be shipping anytime soon, if ever.

I mean if we are going to be fair, let's put everyone under the same microscope, okay?

But none of this is really the issue, the real issue is with NAB itself...

WHAT'S REALLY ERODING NAB EXHIBITOR CONFIDENCE?
In the rapidly changing marketplace, many companies are now starting to put NAB itself under the microscope. Why? There are many reasons for this and some of the reasons are:

• Money.
• The changing nature of the audience.
• The small chance for a return on investment.
• The power of the internet to disseminate the same information.
• The use of more direct methods to reach customers under less stressful conditions.
• The indirect costs accrued as companies prepare for NAB.

In my opinion, I think that sheer numbers have come back to haunt NAB — and those numbers are the profits that it takes to have and staff a booth at NAB. Things change and so it goes with the market itself. Along with the democratization of video came the "commodifying" of video tools. When systems and tools become commodity items, the costs to buyers are low but so are the profits-per-unit to suppliers. In this kind of market economy, it takes an astronomical number of units to bear the cost of an expensive show like NAB.

A smaller company that I know (who has a substantial booth presence at NAB every year), once told me that they spend nearly $400,000 to be at NAB. Considering that they sell their products for an average of about $499 a whack, they'd have to sell one hell of a lot of product to cover the expense and turn a small profit in the end. They don't. They work year to year to pay off the previous year's debt. This is crazy for a company that is only a few million a year gross sales business.

In stark contrast, NAB raises the rates, the city and hospitality industry raises the costs of the hotel rooms and food, this year the cost of advertising in the show's Daily News has skyrocketed in comparision to what we paid last year for a full page (and yet without Apple and Avid there are sure to be far fewer readers), and even the cost of gasoline and travel has increased -- whether you drive or fly.

As the experiential level of user drops every year, (trust me, it has, as both Kathlyn and I have had too many conversations with people at NAB who ask "What's digital video?"), NAB is becoming increasingly irrelevant when considered the floor traffic en masse.

Some argue that it's important to have face-to-face contact with companies and products. But I have been going for years and I rarely see anyone getting more than the scripted and rehearsed presentation that is given every 15 minutes. In the many tens of thousands of presentations given throughout NAB Expo over the course of the event, I doubt that more than a small minority of the audience is getting any real personalized information that they couldn't get (and arguably already have) on the internet.

I can't count the number of people over the years who have come in from one brand of editing system and made a decision to switch to another based on what they learned online. I even see heavy decisions being made here as to which networking software people will use and how to configure and support their network. It happens all the time.

The argument that this stuff requires hands-on facetime is simply becoming increasingly irrelevant in the Day of the Internet.

THE LEVERAGE OF A HUGE USER BASE
Not long after Avid announced that they'd not be having a booth at NAB 2008, Apple asked NAB to remove their name from the list of exhibitors as they were not going. As I have remarked in some of my conversations on this in the Creative COW forums and in the COWBlogs, I suspect that Apple used Avid's departure to put pressure on NAB for discounted floor space. I know I would have.

There is power in knowing that you are the single most likely company at NAB to draw visitors to the show and without a doubt, Apple is likely that company. If Apple shows, so will many of its users. If they stay home, so will many of those who feel that without Apple's presence, the show has little for them -- or at least not enough to make them bear the costs of a trip to NAB.

If I am correct, I think that NAB made a huge mistake by not giving into what I suspect were Apple's pointed requests for (shall we say?) heavily discounted floor space at the NAB Expo.

Why?

No company I can think of has the ability to pull easily 30,000 or more people to the show directly on nothing more than that the company is there. In a day when shows (with the exception of DV Expo) are not audited attendence numbers, it isn't the ones who registered that really count. We know because we had twice as many people register for Creative COW West 2003, than those that showed up. We had over 4,000 register but only half showed up. What are NAB's "show" numbers compared to its "no show" numbers? I don't know but I do suspect that the vaunted 100,000 figure includes many that in the end couldn't find the airport or their car keys when show time came.

By letting Apple "escape," NAB set in motion a chain of events that is sure to reverberate with serious repercussions in the days ahead.

WHERE DOES IT END?
As I said online elsewhere on this subject, I expect over the next few years to see NAB pare itself down to a single building. The shift has just begun and when it's done, NAB is going to bear a lot more resemblance to what it started as: an event for those who need serious broadcast uplink and switching gear, striking deals for their station. As multimedia tools and associated peripherals increasingly cost less and less and drop to slimmer and slimmer margins, commodity tools will have to look elsewhere for their "marketing mindshare."

I can remember when the Sands Convention Center was the oddball addendum of NAB where the "multimedia" showcases were found and it was not considered a real part of NAB by the broadcast contingent. In fact, most never bothered going there -- and today, most who use Apple and Avid tools don't wander the satellite uplink exhibits and the heavy iron seen in the North Hall display areas.

I can remember that Apple and many others didn't attend back then. Now some people make it out that Apple and others must attend or they are not real. Philosophers and others have argued "what is real" for eons and I doubt that NAB is going to resolve the age-old question.

In the early days of Final Cut, Apple needed NAB. They needed it for mindshare, credibility and to show that they were committed to the tool. They succeeded in overcoming the mistrust that many Avid, Media 100, Scitex and other users had when it came to Final Cut.

But those days are gone.

Apple no longer needs to convince anyone that Final Cut is real and at this point, love it or hate it, it's a great tool. Perfect? Far from it. But it has now grown to the point where Apple has little to gain by spending huge sums to go to NAB and preen and prance for the crowd.

I recently was speaking with one of the largest retailers of video equipment in the United States and I asked him: "How long has it been since you really surprised anyone during a presentation at NAB?" Just as I suspected, it didn't take him a minute to answer and he said: "It's been probably five years or so since I really did that. Most people already know what I am talking about." He added that they are there to learn a few finer points but the buying decision has already largely been made.

Apple and Avid know this. After all, both these companies have both in-house marketing departments and outside firms that research these trends and buyer patterns. They see what the trade-offs are by either showing up or not showing up to NAB.

No one is in a better position than Apple to exploit this knowledge of their user base -- and they do.

Welcome to the Day of the Internet, with Google and instant access at your fingertips. Whereas the big tradeshows were once critically important in getting the message out to prospective customers, that is simply not the case today and that argument holds much less validity than it once did. Apple's message, as well as that of rival Avid, reverberate across the net every day.

As the community leader in this field, we have monthly traffic that is many times that of NAB. (Am I saying that we are more important than NAB? Hardly.) Things are changing and with monthly traffic figues like we get, it is not hard to prove that the marketplace is changing fast and that users can now find answers faster than ever before.

When Avid bowed out of NAB 2008, people surmised incorrectly that there could be little more than financial troubles motivating Avid's decision. Hopefully, in this commentary, you have learned something and have considered that there could be other factors at play here.

By letting Apple take the next turn, NAB itself has promulgated a set of events wherein many companies are going to take out their own pencils and scratch out the real costs and returns from the NAB event, and figure out that they too can stay home.

WILL NAB GO THE WAY OF THE DINOSAUR?
Hardly. NAB is the premier show for broadcasters. And I believe it will return to its roots. It enjoyed a time when the show grew to become the top show for related fields like multimedia, corporate video, motion graphics and many other associated cratfs and trades. But as I said earlier, democratisation was a great thing for leveling the playing field and for giving production access to content creators. But with this change to a more commodity stature for the tools, also comes the kinds of low profit margins that make expensive shows like NAB less attractive as a means of reaching customers. This becomes increasingly true when comparing these huge costs to those of the internet where users and prospects abound day-in and day-out, 365 days a year.

One thing's for sure: NAB's glory days are behind it but as long as the accountants will write checks to send company representatives to NAB to "research" new gear and other purchases, there will always be company reps willing to go and suffer attending Las Vegas floor shows and casinos, enduring tax write-off financed lap dances, and forcing themselves to laugh and drink while picking up a few brochures of products they already know about and then report that: "Yep, I found what we should be getting and here is my research..." (Insert sound of dropping pamphlets here.)

It's a tough job but someone has to do it.

Ron Lindeboom
Creative COW

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