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Macromedia, Inc.
(415)
252-2000
600
Townsend Street
San Francisco, CA 94103
www.macromedia.com
Sales
$370 million
Business Description
Experience matters. Macromedia, Inc. is motivated by the belief that great
experiences build great businesses. Our software empowers millions of
business users, developers and designers to create and deliver effective,
compelling and memorable experiences—on the Internet, on fixed media, on
wireless and on digital devices.
We were incorporated in Delaware in February 1992. Since that time, we have
grown to become one of the leading independent software companies in the
world, with net revenues of $336.9 million for fiscal year 2003. Our
principal executive offices are located at 600 Townsend Street, San
Francisco, California 94103. We make available free of charge copies of our
SEC filings and submissions on our Website, www.macromedia.com, as soon as
practicable after electronically filing or furnishing such documents to the
SEC.
Products
Macromedia provides three broad families of products to address this market
opportunity. They include our Macromedia MX Products, our Information
Convenience Products and our Mobile and Device Products.
MACROMEDIA MX PRODUCTS.
The Macromedia MX family of products provides client software, server and
development tools for cost-effectively building websites and Internet
applications that offer highly effective end-user experiences. A substantial
portion of our revenues are derived from licensing our software products,
which are now included in the Macromedia MX product family. The products in
the Macromedia MX product family are specifically designed to work together
through functional integration and a shared user interface standard.
Macromedia MX provides a complete, integrated solution for building Internet
applications that combine the interactivity of multimedia and desktop
applications, the multi-way communication capabilities of collaborative
computing systems and the flexible deployment characteristics of web
applications.
Client Software. Our Client Software is enabling technology distributed
directly to end-users on the Internet.
We distribute our client software for the personal computing platform
through downloads from our Websites at no charge. We also distribute our
client software through original equipment manufacturer (“OEM”) agreements
with a number of major operating system vendors and hardware manufacturers.
Our two primary client software products are Macromedia Flash Player and
Macromedia Shockwave Player.
Macromedia Flash Player—Macromedia Flash Player is the most widely
distributed rich client software on the Internet. The player provides a
runtime environment for text, graphics, animations, sound, video,
application forms and two-way communications. According to a survey by The
NPD Group, Inc. (“The NPD Group”), a provider of global information for
measuring product movement and consumer behavior in a variety of industries,
at March 31, 2003, 98 percent of Web users, which represent approximately
500 million people, could view content created for Macromedia Flash Player.
Macromedia Flash Player is also available on a wide range of
Internet-connected devices such as wireless and handheld devices,
interactive TV and game consoles.
Macromedia Shockwave Player—Macromedia Shockwave Player is a rich media
player used for deploying multimedia content for use in Internet solutions
including education, training, games and commerce. According to The NPD
Group, at March 31, 2003, Macromedia Shockwave Player was available to 60
percent of Web users.
Server Software. Our Server Software is used by thousands of companies
worldwide to develop and deploy Web applications. The Macromedia MX server
product family primarily consists of Macromedia ColdFusion MX and Macromedia
JRun Server.
Macromedia ColdFusion MX—Macromedia ColdFusion MX is the server technology
in the Macromedia MX product family. Macromedia ColdFusion MX provides a
server-scripting environment and a set of features for building
database-driven applications that are accessible through both Web browsers
and Macromedia Flash Player. ColdFusion is used by organizations that need a
way to quickly build scalable business applications. Macromedia ColdFusion
MX is built on an open Java technology architecture. As a result, it can be
deployed on third-party Java application servers that support the Java 2,
Enterprise Edition (“J2EE”) specification, including Macromedia JRun Server,
International Business Machine Corporation’s (“IBM”) WebSphere and Sun
Microsystems, Inc.’s (“Sun”) SunONE application servers.
Macromedia JRun Server—Macromedia JRun Server is a Java application server
based on the J2EE specification. While not part of the Macromedia MX product
family, Macromedia JRun Server integrates with our development tool
offerings and is designed to compete at the mid-range of the Java
application server market through ease-of-use and price. Macromedia JRun
Server is used to deploy applications for functions such as on-line banking
and customer service.
Development Tools. Our Development Tools provide a broad range of
capabilities for building the full scope of Internet solutions including
Websites, Web applications and rich Internet applications. The tools in the
Macromedia MX family include Macromedia Dreamweaver MX, Macromedia Flash MX
and Macromedia Fireworks MX. These products are licensed individually and
together in a suite, Macromedia Studio MX, which also includes Macromedia
FreeHand MX and a license of ColdFusion MX Server Professional Edition,
which is restricted to use on a single computer for development purposes. In
addition to the Macromedia MX products, we license several tools that are
market leaders in their respective categories including Macromedia Director
MX Shockwave Studio for multimedia development and Macromedia Authorware for
creating computer based training solutions.
Macromedia Dreamweaver MX—Macromedia Dreamweaver MX is a leading
professional development environment for creating Websites and applications.
It includes capabilities for visually designing Hyper Text Markup Language
(“HTML”) pages, coding HTML and application logic and working with
application server technologies. Macromedia Dreamweaver MX is used by
designers and developers to create a broad range of Web solutions for
publishing on-line commerce, customer service and on-line education.
Macromedia Dreamweaver MX, which is included in the Macromedia Studio MX
product suite, is licensed per development seat and is available for both
the Microsoft Windows and Apple OS X operating systems.
Macromedia Flash MX—Macromedia Flash MX provides a development environment
for creating Internet user experiences that integrate animations, motion
graphics, sound, text, video and application functionality. Solutions built
with Macromedia Flash MX are deployed via the Web to browsers and
Internet-connected devices that run Macromedia Flash Player. Macromedia
Flash MX is part of the Macromedia MX product family, so it is designed to
work with and complement the other Macromedia MX products, including
integration on the server with Macromedia ColdFusion MX. Macromedia Flash MX,
which is included in the Macromedia Studio MX product suite, is licensed per
development seat and is available for both the Microsoft Windows and Apple
OS X operating systems.
Macromedia Fireworks MX—Macromedia Fireworks MX is a professional graphics
design tool for building interactive Web graphics. Macromedia Fireworks MX
gives professional designers, as well as developers who need to create
graphics for Websites and applications, tools for creating images that can
be deployed to Web browsers and Macromedia Flash Player. Macromedia
Fireworks MX integrates with Macromedia Flash MX and Macromedia Dreamweaver
MX. Macromedia Fireworks MX, which is included in the Macromedia Studio MX
product suite, is available for both the Microsoft Windows and Apple OS X
operating systems.
Macromedia FreeHand MX—Macromedia FreeHand MX is a professional vector
graphics tool that designers and illustrators use to create images that can
be scaled. Macromedia FreeHand MX, which is included in the Macromedia
Studio MX product suite, supports developing images for print, the Web and
the Macromedia Flash Player and is available for both the Microsoft Windows
and Apple OS X operating systems.
Macromedia Director MX Shockwave Studio—Macromedia Director MX Shockwave
Studio is a tool for creating multimedia content that combines images, text,
audio and video into presentations and interactive experiences. For
Websites, Macromedia Director MX Shockwave Studio provides a powerful
solution for delivering multimedia content that supports three dimensional,
or 3-D, images and animations for use in various markets, including
education, games and commerce. In addition, Macromedia Director MX Shockwave
Studio enables the creation of fixed-media content for CD titles and DVD
titles in the entertainment, education and corporate training markets.
Macromedia Director MX Shockwave Studio is available for both the Microsoft
Windows and Apple OS X operating systems.
Macromedia Authorware—Macromedia Authorware is a rich media authoring tool
used for e-learning. Uses of Macromedia Authorware range from creating
Web-based tutorials to simulations incorporating audio and video.
Applications developed with Macromedia Authorware can be delivered on the
Web, over corporate networks or on CD-ROM.
INFORMATION CONVENIENCE PRODUCTS.
This software product family enables non-technical business users to create
and deliver information without intricate technical training. The products
in the Information Convenience family include Macromedia Contribute and
Macromedia Breeze.
Macromedia Contribute—Macromedia Contribute is an easy way to update, add
and publish Web content. With Macromedia Contribute, non-technical users can
make changes to an HTML Website while automatically maintaining site
standards for style, layout and code. Macromedia Contribute, which is
included in the Macromedia Studio MX product suite, enables content
providers and Web professionals to save time and streamline the Web-content
maintenance process.
Macromedia Breeze—Macromedia Breeze solutions enable organizations to
quickly provide customers, partners and employees with consistent,
just-in-time education and training on-line using Macromedia Flash content
and Microsoft PowerPoint to author their content.
MOBILE AND DEVICES PRODUCTS.
This software product family is targeted at device manufacturers, carriers
and media networks. The products in the Mobile and Devices products group
today are Embedded Flash and Flash Lite. These products leverage off of
Macromedia Flash MX, which combines sophisticated multimedia and powerful
application development features, making it easy for Macromedia Flash
designers and developers to deliver both engaging consumer content and rich
mobile business applications to a wide range of Internet-enabled devices and
platforms, from cellular phones to personal digital assistants, organizers,
set-top boxes and game machines. Our Mobile and Devices products provide
devices manufacturers and carriers with the ability to design for
next-generation Internet-enabled devices while effectively targeting the
Macromedia Flash Player version supported on the device.
Market Opportunity
Several broad industry trends in the development of software systems for
corporations, government and educational institutions shape the market
opportunity for our products. First, the digital world has come to
understand what the physical world has known for some time: great
experiences build great business. Organizations are increasingly focused on
providing great experiences for their customers, partners and employees both
in the physical and digital worlds. Second, organizations are adopting
Internet technologies as the primary mechanism for deploying content and
applications to end-users. This trend began in the mid 1990s and is
continuing today, as more and more organizations recognize the benefits of
using Internet technologies to communicate and interact with employees,
customers and partners. Third, large organizations are migrating existing
business systems to a new generation of application-server technologies such
as Java application servers and the Microsoft .NET framework. At the same
time, organizations are building new business systems using application
server technologies to automate business processes, including expense
management, customer service, supply chain interactions, employee training
and support for remote workers and human resources administration. Fourth,
the market for Internet-connected devices including cellular phones,
personal digital assistants, game consoles and home entertainment systems is
rapidly expanding.
In the context of these broad industry trends, we believe there is a
significant opportunity for software that makes it easier and more
cost-effective to create content and applications that provide great
end-user experiences. Creating high-quality, responsive and effective
interfaces for end-users requires a combination of client software for
enabling the display of information and user interactions, server software
that can extend application server technologies to handle the unique needs
of generating a high-quality end-user experience and development tools that
can be used to design content, develop interactions and integrate content
and application functionality. Moreover, as the market for
Internet-connected devices grows, we believe there will be an increasing
demand for products that enable the creation of content and application user
interfaces which can be deployed to personal computers and other
Internet-connected devices.
Given these market trends and the opportunities they create, we believe our
MX family of products provides Information Technology (“IT”) organizations
in business, education and government institutions the client, server and
development tool technologies to create effective end-user interfaces for
Internet technologies and Internet-connected devices. In addition, we
believe creating great experiences should extend beyond technology
professionals. Our Information Convenience products enable non-technical
business users to create great experiences for their customers, employees
and partners. Our Mobile and Device products enable telecommunications
carriers and news and entertainment networks to deliver information to
consumers using modern wireless and high-speed wire line networks.
The current trends in the business and government sectors are also shaping
the long-term demands for specialized computing skills in the labor force.
As a result, educational institutions in both the K-12 and higher education
markets are seeking to incorporate technology into their curricula that
enables students to learn professional skills and gain general computer
competencies through the use of software to complete traditional educational
exercises and analysis individually and in collaboration. The demand for
technology in the education market represents another market opportunity for
us to sell our products directly to educational institutions, instructional
program designers and students.
Competition
We operate in a highly competitive market characterized by market and
customer expectations to incorporate new features and to accelerate the
release of new products. These market factors represent both opportunities
and competitive threats to us.
Our development tools compete directly and indirectly with products from
major vendors including Microsoft, IBM, Corel Corporation and Adobe Systems,
Inc. (“Adobe”). The Web application development tools market is a very
competitive market. While we believe that we are a leader in the market for
professional Web development tools with Macromedia Dreamweaver MX, we face
competition from Adobe GoLive as well as competition from the mid-range
product provided by Microsoft FrontPage. We believe our ability to compete
favorably in this market in the future will require continued product
development and innovation resulting in new functionality that can integrate
with our existing products so that we can offer our customers a greater
suite of products and solutions.
Our server products compete in a highly competitive and rapidly changing
market for application server technologies. We face competition from major
vendors including Microsoft, IBM, BEA Systems, Inc. (“BEA”) and Sun. In
addition, Macromedia ColdFusion MX competes indirectly with several
technologies available today at no cost including the PHP and PERL
programming environments that are available for the Apache Web server.
Macromedia JRun Server competes with large Java application server vendors
as well as products available at no cost including the Tomcat Java Servlet
Engine provided by the Apache Foundation. We believe our future results
largely depend on our ability to innovate by developing new products and
providing enhancements and upgrades of current product offerings that
compete favorably with respect to reliability, performance, ease of use and
pricing. However, we believe that we will be able to continue to
successfully compete with our server products through a combination of
functionality, ease of use and price performance.
Today our client technologies, Macromedia Flash Player and Shockwave Player,
command leadership positions in their respective categories. For animation
and application user interfaces, Macromedia Flash Player is the most widely
distributed Web browser plug-in. We distribute our client technologies
through OEM agreements with a number of major operating system vendors and
hardware manufacturers. For application development, Macromedia Flash Player
faces competition from time to time from new vendors and technology
providers. The on-going success of Macromedia Flash Player could be
threatened by new capabilities added to Web browsers or by alternatives
provided by major operating system vendors including Microsoft and Apple. We
believe that our existing market penetration and user acceptance provides
our client technologies with a competitive advantage over other competing
technologies.
Our newly announced Information Convenience products appeal to a much
broader set of customers. Competition for the non-technical business user
comes from a much broader range of companies. Generally these products
target a specific business work flow such as updating content on a Website
or using the Internet to communicate with a company’s customers, partners
and employees. Companies in this space include Microsoft and WebEx
Communications, Inc.
ticker: MACR
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