MetaCreations' Puzzling Move

Many Macintosh users had to be scratching their heads after yesterday's announcement that MetaCreations, developer of Painter, Bryce, Kai's Power Tools, and a host of other graphics programs, has undergone yet another corporate restructuring, and perhaps its most radical one yet. The company said it will focus its efforts solely on developing "e-commerce visualization solutions" involving its MetaStream 3-D graphics technology, and that it will "divest its graphics software assets that do not complement this strategy." As part of the restructuring, Mark Zimmer, president of the company's business graphics division, has replaced Gary Lauer as CEO. Lauer, a former Silicon Graphics executive, had been CEO since February 1998.

MetaStream, a file format that permits streaming of 3-D graphics on the Web, is derived from technology developed by Real Time Geometry, a small Princeton, N.J., company that MetaCreations acquired in 1996 when the latter was known as MetaTools (see the sidebar "MetaCreations: A Chronology"). MetaCreations developed the format in cooperation with Intel, and, in May 1998, released a PC version of the MetaStream browser plug-in that's now bundled with Microsoft Windows. MetaCreations finally released a Mac version at the August 1999 Siggraph conference in Los Angeles.

The company offers the streaming technology through MetaStream.com, a venture in which it has an 80-percent ownership stake; Computer Associates owns the other 20 percent. Web-based retailers can use the technology to display 3-D models of products they want to sell.

For now, MetaCreations won't say exactly which products it will divest, to whom it might sell them, or even when it intends to reveal further details. But it is sure to be a major sell-off: as part of the restructuring, MetaCreations said that 100 of its 250 employees will receive pink slips. The company has locations in Carpinteria, Calif.; Scotts Valley, Calif., where Zimmer is based; and Princeton.

Discerning which products might be divested is tricky, because most of the company's 3-D graphics programs, including Bryce and Ray Dream Designer, can save files in MetaStream format. However, few users would describe these primarily as "e-commerce visualization solutions," and some programs that once appeared central to MetaCreations' product strategy, such as Painter and KPT 6, would seem even less appropriate as e-commerce tools. Yet it's hard to believe that Zimmer, who conceived Painter nearly 10 years ago, would cut loose his own brainchild, a popular natural-media program that recently saw a major upgrade.

In a prepared statement, MetaCreations said that its board of directors saw much growth potential in e-commerce visualization, but only limited prospects in graphics software. Nevertheless, the move represents an about-face from the company's recent pronouncements about its future. At the Seybold San Francisco show in September, MetaCreations representatives described a roadmap that called for upgrades to most of the company's products through much of next year. MetaCreations recently announced KPT 6, an all-new set of Photoshop plug-ins, and had set on a new strategy of offering individual plug-ins for sale on its Web site. And the company was set to roll out Carrara, a new 3-D graphics program that appears to combine the best features of Ray Dream Designer and Specular Infini-D. (MetaCreations announced Carrara in September, but the product has yet to ship.)

Of course, MetaCreations is not the first graphics software developer to hitch its wagon to the Web. Earlier this year, Extensis changed its name to Creativepro.com and shifted its focus from developing graphics plug-ins to offering a variety of Web-based services to graphics professionals. Adobe Systems recently beefed up its Web site and is now offering Web-based software applications that let you optimize graphics and create PDF files. Macromedia has launched Shockwave.com, a new entertainment division that offers original content in the Shockwave multimedia format. However, none of these companies abandoned their existing product lines to the extent that MetaCreations appears to be doing. And Mac users have to be at least somewhat concerned that the company is placing so much emphasis on what has so far been a PC-centric technology.

Until MetaCreations offers more details about which products it intends to sell off, it will be difficult to say just how much impact the move is likely to have on Mac users. Part of the answer depends on which company or companies purchase those products. But once again, we're seeing dramatic evidence that the Web is radically changing the way software developers do business.

MetaCreations: A Chronology 1987

John Wilczak launched Harvard Systems Corporation, a Los Angeles-based reseller of desktop publishing systems. Wilczak made his initial forays into software publishing by acquiring marketing rights to some PC-based graphics utilities.

Letraset introduced ImageStudio, a gray-scale image-editing program for the Mac developed by Fractal Technology, a company headed by Mark Zimmer. The software would eventually inspire the development of Adobe Photoshop.

1989

Letraset introduced ColorStudio, a color image-editing program developed by Fractal Technology, charging $1,995 for the software. At the same time, Adobe introduced Photoshop 1.0 for less than $1,000. Although some reviewers considered ColorStudio to be the superior program, the price disparity gave Photoshop a big advantage, and it would go on to become one of the most popular software packages for graphics professionals. Letraset would eventually abandon its Macintosh graphics applications.

1990

Fractal Technology reacquired marketing and distribution rights to ColorStudio and ImageStudio and renamed itself Fractal Design. Instead of developing software for other companies, Fractal set on a new strategy to market its programs directly to end users. The company's first product was Fractal Painter, a natural-media painting program that soon gained a loyal following among digital artists. In a departure from standard software distribution schemes, the company packaged the program in a paint can. However, ColorStudio was not so successful and the company soon retired it, along with ImageStudio.

1992

Harvard Systems introduced Kai's Power Tools, the first popular set of third-party plug-ins for Adobe Photoshop. Kai Krause joined the company and soon gained a reputation as one of the most colorful figures in the software business.

1993

Now primarily a software developer, Harvard Systems Corporation changed its name to HSC Software.

1994

HSC acquired U.S. distribution rights to Live Picture, a revolutionary image-editing program developed in France. In a unique marketing scheme, the company charged nearly $3,000 for a pre-release version, and found many takers. Kai Krause wowed trade show attendees with his demonstrations of the software. HSC also launched KPT Bryce, a program for generating 3D landscapes, and KPT Convolver, an image-correction plug-in for Photoshop.

1995

HSC changed its name to MetaTools.

1996

FITS Imaging, the French company that developed Live Picture, reacquired U.S. distribution rights and set up a U.S.-based corporation named after the product. Former Apple chief John Sculley became CEO of the new venture. Live Picture would later join with Hewlett-Packard, Microsoft, and Eastman Kodak to develop FlashPix, a new image format based on Live Picture technology.

No longer marketing Live Picture, MetaTools introduced its first consumer software product, Kai's Power Goo, eventually followed by Kai's Photo Soap and Kai's Power Show. Later that year, MetaTools acquired Real Time Geometry (RTG), a small developer of 3-D graphics software based in Princeton, NJ. RTG's technology would eventually lead to MetaStream, 3-D streaming technology for the Web.

Fractal Design acquired Ray Dream, the developer of Ray Dream Designer 3-D software.

1997

During a memorable conference session at January's Macworld Expo in San Francisco, Kai Krause announced that MetaTools was ready to abandon the Photoshop plug-in business. Joined by rock star Peter Gabriel, he offered the first demonstrations of RTG's 3-D graphics technology. In one demo, Gabriel used his voice to generate animated 3-D graphics in real time.

MetaTools acquired Specular International, developer of Infini-D 3-D graphics software.

MetaTools and Fractal Design announced their merger, forming a single company from what had been five separate enterprises: MetaTools, Fractal Design, Ray Dream, Specular, and RTG. MetaTools founder John Wilczak was the CEO and Fractal founder Mark Zimmer became chief technical officer. The new company changed its name to MetaCreations, maintaining offices in Princeton, Carpinteria, Calif., and Scotts Valley, Calif. However, after months of disappointing financial results, Wilczak stepped down as CEO.

1998

Gary L. Lauer, formerly president of Silicon Graphics World Trade Group, took the helm, replacing interim CEO William H. Lane. MetaCreations and Intel announced MetaStream, a 3-D streaming technology for the Web. Microsoft agreed to bundle the MetaStream plug-in with Microsoft Windows.

MetaCreations announced that it was returning to the plug-in business with KPT 5.

1999

Spring: MetaCreations issued a terse press release announcing that Kai Krause had left the company. Shortly thereafter, MetaCreations sold Kai's SuperGoo, Kai's Photo Soap, and Kai's Power Show to ScanSoft, which now offers all three in a $50 package called Photo Factory. The company said it would focus its efforts on developing products for graphics professionals, with an emphasis on 3-D technology.

Summer: MetaCreations announced Canoma, a program for generating 3-D scenes from 2-D images. Canoma, along with Bryce 4, could save files in MetaStream format, but it wasn't until August's Siggraph conference when MetaCreations finally released a Macintosh version of the MetaStream plug-in, which is needed to view MetaStream content on the Web.

Fall: At the Seybold conference, MetaCreations demonstrated Carrara, a 3-D graphics program that combined the features of Ray Dream Designer and Specular Infini-D. However, as of mid-December, the product had not been released.

On December 14, MetaCreations announced that it will "significantly restructure its business to focus on its e-commerce visualization solutions and to divest its graphics software assets that do not complement this strategy." As part of the restructuring, the company said it will lay off 100 of its 250 employees. Mark Zimmer replaced Gary Lauer as CEO.

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