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Adobe Swallows Macromedia

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It's taken 20 years, but the graphics application industry is down to two remaining companies from the early days. Adobe announced its plan to acquire Macromedia last week in an all-stock transaction valued at $3.4 billion. The deal, if approved by both boards and the U.S. Federal Trade Commission, gives Macromedia stockholders about 18 percent of Adobe.

<http://www.adobe.com/aboutadobe/invrelations/ adobeandmacromedia.html>

When the Macintosh was launched, four companies quickly took over the graphics program field: Adobe, Aldus, MacroMind, and Quark. Each had its strengths. Adobe was the typographic and vector giant. Aldus and Quark each had page-layout programs that boasted legions of adherents from practically the first opening of the boxes' shrinkwrap. And MacroMind had multimedia authoring tools.

Web Design Dominance -- In 1992, MacroMind merged with Authorware to become Macromedia. In 1995, it bought Altsys, makers of Aldus FreeHand (more on that in a moment) and Altsys Fontographer. Macromedia introduced its Web page editing program Dreamweaver in 1998, and subsequently beefed it up with two acquisitions: in 1999, it purchased Andromedia, a Web traffic analysis firm, and in 2001 bought Allaire, the firm behind the Cold Fusion scripting language.

Macromedia's combination of scripting and interactivity led it to dominance in the Web-based player world. Shockwave and Flash have become de facto standards for vector-based interactive presentations. Despite many efforts, no other serious competitors have materialized.

Likewise, Macromedia's integration of Cold Fusion and ASP into Dreamweaver cemented its ownership of the graphical Web site market. The tied-in scripting and database support drove Dreamweaver's adoption over Adobe GoLive, formerly CyberStudio, which Adobe had bought from the German firm GoLive, Inc.

Print Design Turf Wars -- During the time that MacroMind was taking over the interactive and Web authoring world, Aldus and Adobe became dominant in page layout, illustration, and image editing.

Aldus had built a large suite of products, starting with PageMaker, by adding FreeHand (produced by Altsys under license to Aldus), Persuasion (arguably the best presentation software of its day), SuperPaint, and IntelliDraw.

Adobe started with fonts and PostScript, and launched Illustrator for vector-based illustration, which was always in close feature competition with FreeHand. But Adobe's juggernaut was Photoshop, which came out in 1990. Photoshop emerged from work by two genius brothers, one at Industrial Light and Magic and the other at graduate school in Ann Arbor, MI. It was an immediate success, destroying its fine competitor Fractal Design ColorStudio.

With Photoshop, Illustrator, fonts, and PostScript licensing driving sales, Adobe became an ever-larger company, and finally made an offer to Aldus to merge in 1994. The merger required the spin-off of Aldus FreeHand with the rights reverting back to Altsys; Altsys resold those rights to Macromedia the following year.

<http://db.tidbits.com/article/04019>

Acrobat grew from being a footnote when Adobe first introduced it - with per-seat pricing for every user - to become the world's only real document interchange format that retains the look and feel of original documents. Even Microsoft has been unable to compete effectively with Acrobat, which is saying something.

Adobe later acquired Frame, the third remaining page-layout program developer, and introduced InDesign as the successor to PageMaker, which had grown long in the tooth and was being handily beat by QuarkXPress.

A New Competitive Landscape -- Now we've reached the end of the path. Adobe's competitors now aren't Quark or Viewpoint (formerly MetaCreations, and other names before that), but rather Apple and Microsoft. While striving to release software that works on both Windows and the Mac OS, they're being battered at the top by Apple's professional video tools and at the bottom by Microsoft's and Apple's home layout and photo tools.

To achieve the scale to compete against operating system vendors, Adobe's purchase of Macromedia makes perfect sense and probably won't raise anti-trust flags. The two companies have almost as small an overlap as when Aldus and Adobe merged, which resulted in Adobe unloading FreeHand to Macromedia. Macromedia's Dreamweaver will certainly supplant GoLive, but it will take some time to integrate Dreamweaver fully into Creative Suite. With Creative Suite 2 just shipping, I expect Creative Suite 3 will see full Dreamweaver integration with interim plug-ins implementing some of the GoLive CS2 features.

FreeHand and Illustrator find themselves at odds once again, but it's again likely that FreeHand will be the loser in the battle. Although still supported, it has been a less and less important part of Macromedia's offerings, while Illustrator has stayed front and center for Adobe.

Overall, this could be a win for graphics professionals because it will mean more consistent pricing and more integration across tools they already use. Most Web designers already have to use Flash, Director and Shockwave, Illustrator or FreeHand, InDesign, and Dreamweaver. It's just a natural progression that one company offers these all in one place.

I said at the outset only two companies remain. Obviously, Adobe is one, with what will top $2 billion in revenue between it and the former Macromedia. The other is Quark, Inc., a company that started with its flagship QuarkXPress product two years after Aldus released PageMaker.

Quark has tried to release products other than those focused on page layout over the years, like Quark Immedia, an odd multimedia authoring application, or an image-editing program licensed from a Japanese firm that they could never quite push out the door. Quark is privately held and their financial state is unknown, although it's generally been perceived over the years as massively profitable.

The future is clearly about a very small number of graphics developers with integrated applications - integrated together like the iLife suite or the Creative Suite or Microsoft Office. With the purchase of Macromedia, Adobe has taken a large step towards trying to preserve its multi-platform role in setting the pace for the graphics world.

 

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