Macromedia

Overview

Macromedia was an American graphics, multimedia and web-development software company that existed from 1992 to 2005, headquartered in San Francisco, and was formed from the merger of Authorware Inc. and MacroMind–Paracomp (Centre for Computing History). Its original products were Authorware, a flowchart-based tool for interactive programs, and Director, the timeline-based multimedia authoring tool from MacroMind that became the company’s flagship product until the mid-1990s (Centre for Computing History). Macromedia’s lasting significance is not any single product but the arc it traces: a CD-ROM authoring house that remade itself for the web, assembled the tools that defined early interactive web design, and was then absorbed by Adobe for about $3.4 billion — largely, by Adobe’s own account, to own Flash.

From CD-ROMs to the web

Macromedia formed in 1992 when Authorware and MacroMind/ParaComp merged, with Authorware’s Bud Colligan as chief executive (Centre for Computing History). Authorware itself had been started by Michael Allen in 1985, while MacroMind/ParaComp came from the 1991 merger of ParaComp and MacroMind (Encyclopedia.com). The new company’s early strength was its Director and Authorware tools, programs developers used to create educational and entertainment CD-ROMs (Encyclopedia.com).

The web changed the brief. In 1995 Netscape incorporated Macromedia software into its browser, and Macromedia introduced Shockwave Player, a free Director plugin for Netscape Navigator that let interactive content run on the web (Encyclopedia.com). Shockwave, the company hoped, would compress Director multimedia so it could travel over slow internet connections — Director files could be reduced by about 60 percent — and shipping the player free would build the audience that would then buy the authoring tools (Encyclopedia.com). It was the distribution playbook Macromedia would repeat, more successfully, with Flash.

The FreeHand rescue and the web toolkit

Macromedia’s move into illustration came through an antitrust accident. In January 1995 it acquired Altsys Corporation, developer of the vector-drawing program FreeHand, after Adobe announced a merger with Altsys’ business partner, Aldus; because FreeHand resembled Adobe Illustrator, the Federal Trade Commission had issued a complaint in October 1994 ordering FreeHand divested back to Altsys, and thence to Macromedia (Centre for Computing History). Encyclopedia.com puts it more bluntly: the purchase saved FreeHand, since an earlier Adobe acquisition of Altsys had threatened the product’s existence (Encyclopedia.com). FreeHand’s vector-graphics rendering engine later proved useful in building Fireworks, Macromedia’s tool for rapidly creating website prototypes and application interfaces (Centre for Computing History).

The web toolkit filled out quickly. Macromedia acquired iBand Software in March 1996 and built Dreamweaver around portions of its Backstage HTML authoring tool, releasing the first version in 1997 with “Roundtrip HTML,” which tried to preserve hand-edited code during visual edits (Centre for Computing History). Dreamweaver was aimed not at existing WYSIWYG editors but at bare-bones HTML editors: developers could hard-code HTML and see the result in the visual window, which is what made it initially successful (Encyclopedia.com). In the same period Macromedia acquired FutureWave Software and renamed FutureSplash Animator as Macromedia Flash, again giving the player away free to gain market share (Centre for Computing History).

Growth was not smooth. By 1997 Macromedia was in debt, chief executive Robert Burgess — who had joined in 1996 — cut 10 percent of the workforce, and shareholders filed a class-action lawsuit in August 1997 accusing the company and five executives of insider trading; the suit was settled in August 2001 for $48 million with no admission of liability (Encyclopedia.com). The company recovered by leaning further into web tools, adding ColdFusion and related server products through its 2001 acquisition of Allaire, so that by 2001 its portfolio included ColdFusion, JRun and HomeSite alongside its design tools (Centre for Computing History).

The $3.4 billion sale to Adobe

On April 18, 2005, Adobe agreed to acquire Macromedia in a $3.4 billion stock swap, offering Macromedia holders 0.69 Adobe shares for each Macromedia share, or about $41.86 in stock at the previous Friday’s closing prices, leaving Adobe holders with about 82 percent of the combined company (TheStreet). Adobe chief executive Bruce Chizen framed the deal as a combination of “the complementary functionality of PDF and Flash” into “an industry-defining technology platform” for creating, managing and delivering content from documents and images to audio and video (TheStreet). Chizen stayed as chief executive, Shantanu Narayen remained president and chief operating officer, and Macromedia chief executive Stephen Elop joined Adobe as president of worldwide field operations (TheStreet).

The acquisition closed on December 3, 2005, in a share swap of approximately $3.4 billion, and Adobe integrated Macromedia’s operations, networks and customer-care organisations shortly thereafter (Centre for Computing History). At that moment Macromedia’s portfolio — ColdFusion, Flash, Fireworks, FreeHand, Dreamweaver, Director, Authorware, Fontographer and Sitespring — passed in full to its former rival (Centre for Computing History). The irony of the FreeHand story was complete: the product Macromedia had acquired to keep it out of Adobe’s hands ended up inside Adobe anyway, while the product Adobe most wanted, Flash, would within five years become the centre of Adobe’s most public fight, with Apple, over the future of the mobile web.

What this profile does not claim

This profile does not claim a precise month for the FutureWave acquisition: the Centre for Computing History dates it November 1996 and Encyclopedia.com dates it January 1997, and the discrepancy is recorded in the open items rather than resolved. It does not assert which founder held which title at formation beyond Colligan as chief executive, since tertiary summaries differ. It does not cover the post-acquisition fate of individual Macromedia products in detail — Dreamweaver and Flash survived inside Adobe, FreeHand did not — beyond what the sources read here establish, and it does not repeat the common shorthand that Adobe bought Macromedia “for Flash” as if that were the whole deal: Chizen’s own announcement rationale paired PDF and Flash, and the $3.4 billion price bought an entire web toolkit, not one product.