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Dell tries stealing creative pros away from the Mac

Ad agencies, film producers and photo editors have sustained Apple's Mac business for decades. But sensing Apple's eye is off the ball, Dell is pushing hard to attract those lucrative buyers.

Dell's Precision M3800 workstation laptop is designed to attract customers using Apple's MacBook Pro. Dell

Adam Wrigley, a product designer at Frog Design, is the kind of creative professional you might expect to see using a Mac. But when choosing between Apple and Dell for his most recent laptop, he settled on the Dell.

"I wanted to get as much hardware as I could," he said of his choice. "With the Mac, I couldn't afford a bunch of features."

That's music to Dell's ears. For decades, a core group of creative professionals sustained Apple's personal-computer business by buying Macs for editing photos, producing videos and designing ads. It's a lucrative, loyal base of customers with a taste for high-end hardware -- and a potentially critical market for Dell to target as it tries to rebuild its PC business.

"I don't think it's a big focus for them," Chief Executive Michael Dell said of Apple's efforts in the market for high-end machines for design professionals. Dell, in contrast, has 40 percent to 45 percent of the market for workstations, Dell said. Combined with its high-resolution external monitors, it's "a special focus market that we're clearly doing well in."

Sensing a potential vulnerability, Dell representatives are showing up at film festivals to court the creative folks, and Dell engineers are designing machines like the M3800 laptop to try fulfilling their need for horsepower and style.

"Rich content is a high-growth market, and it's one where Apple is very strong," said Andy Rhodes, leader of Dell's Precision workstation business. "They have high market share. But customers are telling us Apple is not investing in the future of that market."

It's no wonder Dell has Apple envy. In 1997, Michael Dell said Apple should "shut...down and give the money back to shareholders." Two years later, Dell had clawed its way to the top of the PC market, beginning a long reign there. But fortunes have reversed now: Dell is struggling to rebuild in a faltering PC market while Apple's Mac revenue grew 9 percent in the last quarter and unit shipments grew 11 percent.

Apple is still strong with the creative professionals, but Dell is smart to pounce. More than two years ago, customers started telling Dell that Apple wasn't serving them well, in particular because of Apple's botched transition from its respected Final Cut Pro 7 video-editing software to its radically different Final Cut Pro X. Dell spun up what it calls "customer-inspired roadmap creation" to make products that would get creative pros to switch off their Macs, said Rhodes.

Dell is trying to bring style and polish to its products for the market, but Dell's core values -- performance at the right price -- remain at the center of the sales pitch. That's compelling for companies like video production firm Dawnrunner Productions, whose video-rendering times dropped 25 percent to 30 percent after switching from Macs to Dells, according to Chief Executive James Fox.

"It was a very scary move," Fox said. "When we pulled the trigger, we all said, 'Wow, that was really easy.'"

'Slow exodus'

Apple, which didn't comment for this story, is a very different company now than even two or four years ago. The lion's share of Apple's business is now selling iPhones, a much more mainstream business than courting graphic designers and musicians. In the first quarter of 2015, Apple generated $5.6 billion in revenue by selling 4.6 million Macs.

By comparison, it sold 61.2 million iPhones for $40.3 billion and 12.6 million iPads for $5.4 billion.

Nowadays, creative pros are slipping over to the Windows side of the PC industry, said Jon Peddie, who's tracked the workstation market for years at his firm Jon Peddie Research.

"It's a very slow exodus, no stampede," Peddie said, but Dell is the top beneficiary. "Dell is making the most aggressive moves in screen resolution, power-performance and price. Dell is probably Apple's biggest threat in the professional space now, with (Hewlett-Packard) No. 2."

Michael Dell believes his company's outsized presence in the workstation focus is contributing to its comeback. "There are three companies that are gaining share. We're certainly one of them."

But if Frog Design and Dawnrunner show Apple's vulnerability, Jessica Ruggieri of ad and film agency Sleek Machine shows the company's enduring strength.

What would it take to get her to switch to a Dell? "Maybe if they were bought out by Apple," she quipped.

"I will be anti-PC forever," she said of her disdain for Windows machines. She imprinted on the Mac lineage when she first learned how to use computers. "I'm very comfortable with it. Not only is it a beautiful workspace, it's beautifully designed, aesthetic and streamlined. Compatibility with Mac hardware and software [makes a Mac] one clean system."


Apple's cylindrical Mac Pro, which brought some style to the boxy world of workstations, is shown here running Final Cut Pro X to edit the movie "Focus."
Apple's cylindrical Mac Pro, which brought some style to the boxy world of workstations, is shown here running Final Cut Pro X to edit the movie "Focus." Apple

Apple's momentum also ensures any industry transitions won't be fast. Take the case of advertising and marketing firm Deep Focus, which plans to continue using Macs. "The main reason is continuity -- partners are on Mac, vendors are on Mac, and most of our team is on Mac at home," said Ken Kraemer, the company's chief creative officer.

Apple's increasingly consumer-oriented business cuts both ways, Kraemer added. On the plus side, it makes it easier for creative pros to tap into new technological abilities. On the minus side, it means Apple's attention is elsewhere.

"In the very long term, this apparent focus will probably undo the dominance Apple has in creative fields," Kraemer said. Windows PCS are cheaper and faster, particular for 3D graphics work that's becoming more important, he said, but for now "Mac hardware is great for 90 percent of the creative tasks we do."

Dell tries getting stylish

Dell's success was based on operational efficiency, a direct-to-customer sales model that plumped up profit margins and a reliance on Microsoft and Intel to shoulder most of the research and development burden. Apple, by comparison, always had its own operating system, and it increasingly designs or tightly controls its hardware, too. Where Dell accepted the "Intel Inside" stickers and marketing money from Intel, Apple kept its machines pristine and left customers recognizing only its own brand.

Dell's recipe didn't work, though, as evidenced by a sliding share price that forced the company to go private in 2013. Apple was partly responsible for Dell's decline by diverting people's spending toward smartphones and tablets. But the company had plenty of other troubles, including the rise of Asian PC manufacturers like Lenovo and Asus and Microsoft's market-chilling missteps with Windows 8.

For its comeback, Dell is hardly trying to transform itself into Apple. It's still reliant on Intel and Microsoft, it sells heavy-duty server computers that Apple lost interest in, and it's small potatoes in the tablet and smartphone market. But it's not afraid of aping Apple's success where it makes sense.

The Dell M3800 is 18mm (0.71 inches) thick and includes a high-speed Thunderbolt port to make it easier for Mac users to move to the Windows machine.
The Dell M3800 is 18mm (0.71 inches) thick and includes a high-speed Thunderbolt port to make it easier for Mac users to move to the Windows machine. Dell

"We've made good-looking machines again," Rhodes said. "The creative types care about look, feel, lightness."

Dell's newest M3800 also added a Thunderbolt 2 port to appeal to Mac customers using the high-speed port for storage and monitors.

One convert is Drew Wolber of film, photo and graphic design agency Sparksight, which switched from Macs to Dell machines.

"Macs do a great job of having form and function, but Dell seemed more about function than form," he said. But no more. "The M3800 looks cool, which was a huge thing. This is a pretty sexy-looking laptop, and the 4K screen is even cooler."

Not everyone is so convinced. "The Dell is twice as thick and heavy as the Mac laptop," Wrigley said. "Even though I couldn't get the processing power, the sleekness almost swayed me to get the Mac laptop."

And Dell's trackpad just can't match the Mac's, something Rhodes says Dell is working on.

Dell also has improved its desktop workstations, models with more horsepower that sit in the office for jobs like rendering video to apply special effects or coloring styles. Dawnrunner's Precision T7500 workstations couldn't match the clean interior of Apple's Mac Pro models, but with the newer T7600, Dell fixed the problem, he said.

"I went through film school and started my business all on Mac," Fox said. "I never in my wildest dreams expected to move to an all-PC shop."

Final Cut fiasco

One big trigger in particular was Apple's release of Final Cut Pro X in 2011, a major departure from the Final Cut Pro 7 that had revolutionized film and video industry by dramatically lowering prices for what had been rarefied technology. FCP X's shortcomings opened the door for Adobe Systems' rival Premiere Pro, which runs on both Windows and Mac.

"In high-end post-production [video editing] we never used to see Windows," said Bill Roberts, senior director of product management for Adobe's video tool business. "We see more and more of that now, in particular in higher-performance rooms."

Fully half of Premiere Pro's double-digit growth comes from customers switching from Final Cut Pro, Roberts said. "When FCP X came out, it was a boon to us," Roberts said. Adobe woos customers to the point where it put engineering staff on site for editing of the 2014 movie "Gone Girl."

Though Apple shored up FCP X's initial shortcomings and touts that it was used for editing major motion pictures such as the Will Smith vehicle "Focus," some customers were displeased by the new version's differences, by the fact that FCP X couldn't import files from FCP 7, by plug-ins that stopped working and by having all the changes come by surprise.

The demise of Apple's Aperture software for editing and cataloging photos, while less abrupt than the FCP X shift, also didn't help. Even those who are sticking with their Macs, like Xanthe Wells, chief creative officer of ad agency Pitch, were distressed.

"They tried to oversimplify some of their Pro products and wound up removing features that are needed for creative professionals," she said. "With the tremendous growth the company has seen over the last 10 years -- especially following the introduction of iPhone and iPad -- there is no question they've stopped focusing as much on the Pro user."

For Wolber's film-school days, buying a Mac and Final Cut was a prerequisite. An entire generation emerged knowing Final Cut Pro inside out.

"The logic and intuitiveness was ingrained in us," he said. "When Final Cut Pro X came out, it was such a departure from everything we knew. It was a glorified iMovie."

It's no wonder Dell is taking the offensive trying to win over the Mac faithful.

"In the battles we're in, we win 9 times out of 10," Rhodes said. "We're trying to get into more battles."