Broadens scope to include ‘personal’ authoring, commercial developers and titles publishing

No matter how you cut it, the multimedia authoring firm Authorware Inc. is doing better today than most companies in an industry still wet behind the ears. Founded in 1987 by former Control Data Corp. executive Michael Allen, who was instrumental in developing a groundbreaking interactive training system called Plato, Authorware’s original charter was to provide authoring tools for computer-based interactive learning. Today the Redwood City, CA-based firm claims to have doubled its revenues for three consecutive years, and it estimates that 1991 will ring in at about $12 million.

In the past two months, the company has signed impressive deals with some of the largest computer hardware and software companies in the business, the most recent of which is an agreement with PC clone giant Acer Inc. of Taiwan. Acer will bundle an English-language version of Authorware Star, Authorware’s new “personal multimedia authoring” product, with all of its media-capable computers.

Taking flak. Despite the fact that Authorware has taken flak over the years for its hefty price tag — the original version of Authorware Professional for the Macintosh shipped at $8,000, a price that didn’t (and still doesn’t) include run-time versions — the strategy has proven enormously successful with corporate customers, including American Airlines, Steelcase Inc., Northern Telecom, 3M Corp. and the U.S. Department of Defense. In fact, Steelcase estimates that it’s achieved a return-on-investment of 128 percent through its Authorware-based interactive applications.

But custom-designed interactive learning in the corporate world is not the only area where authoring software is necessary, and Authorware president and chief executive officer Bud Colligan says that Authorware is now shifting its strategy to develop authoring products for the desktop computer user and for commercial developers who build consumer and mass-market titles, as well as to publish its own titles under the auspices of its New Media Publishing group. This ambitious strategy relies as much on progress in hardware and software technologies as it does on the strength of Authorware itself.

FROM THERE TO HERE

Ironically, Authorware’s success in the corporate world has come from what many in the industry said was its greatest weakness: its high price tag. Where other veteran multimedia companies such as MacroMind have struggled over the years to maintain cash flow while evangelizing the benefits of interactivity, Authorware’s price allowed the company to take its product inside large companies, such as American Airlines, and design interactive applications side-by-side with its customers while also teaching them to use the product by themselves.

“Being so expensive incents people to figure out what’s going on up front,” says Colligan. In addition, he believes the cost of authoring software should cover more than initial product development and quality control. “A lot of titles and in-house applications will have more than a five-year life cycle, so your development and maintenance costs are really the key,” he says. “If the product led to the productivity increases that we were touting, then the cost of the tool was not the issue. It was more people’s commitment to actually carry through and finish a project in light of the real cost involved in the development and maintenance of applications.”

Charging for run-times. Authorware Professional’s price tag wasn’t the only company strategy that took flak (despite the fact that certified developers pay $4,000 and schools pay $995). Another was Authorware’s policy on “run-time” versions of the program, which allow the user to play, but not create, an application. Where some companies charge little or nothing for player versions of their software, Authorware charges between 1 and 3 percent (of the list price for commercial titles) for run-times, depending on volume. Corporate customers choose a rate structure depending on how they intend to use the product, but they always pay for what they get.

“When you give away run-times, there’s no relationship between the number of units shipping and what you’re getting as compensation, so there’s no business,” says Colligan. “Then you’re relying totally on your authoring tools to create your business. Our run-times are 20 percent of our revenue, and I expect that to grow.”

Colligan says he estimates Authorware has more run-times in the field than MacroMind Director or Asymetrix ToolBook, two of the most commonly used commercial authoring packages. (HyperCard, though also widely used, can’t really be counted because it’s bundled with the Macintosh.) “I’ve calculated a total of about 383,000 run-times that are currently being used,” he says. “It’s not like every person is buying a copy –American Airlines bought a site license, for example, but they are developing interactive media for 50,000 of their 90,000 employees, and that’s how many people are eligible to use the applications.”

AN IMPRESSIVE LIST

The success — critical and financial — of Authorware’s large-scale custom applications allowed the company to attract an impressive list of investors and companies interested in joint ventures and bundling deals.

One such investor was ASCII Corp., the largest software publisher in Japan, founded by early Microsoft partner Kay Nishi. The ASCII deal provided sufficient capital for Authorware to develop its first “personal” authoring product, Authorware Star.

Star was not designed to deploy large-scale applications such as those created with Authorware Professional. It cannot play Professional applications (though Star files can be opened in Professional), and it doesn’t include some of Professional’s data-intensive high-end variables and functions that measure a student’s progress. In addition, it can’t link multiple applications, and it isn’t designed to be run over a network.

However, Star does allow users to ship a run-time version of the program with a Star-authored presentation, so a recipient can view the file without owning the program. It also contains a library of “clip media,” as well as presentation templates that can include animation, sound and graphics.

A Kanji version of Star will be bundled with NEC’s new Windows multimedia computer, the PC-98GS. NEC is the largest personal computer company in Japan, with a 65 percent market share. Colligan believes the NEC deal will allow Authorware to be the standard interactive media authoring system in Japan.

Thanks to ASCII’s intercession, the bundling deal is the first since NEC bundled MS-DOS with its computers in 1981. ASCII introduced 15 titles built with Authorware when the PC-98GS was launched in September, and it believes it will ship 60,000 copies of Authorware Star in its first year on the Japanese market. Colligan says Star will be a retail product sometime in 1992.

Authorware everywhere. In addition to its flagship Macintosh version, which is in the process of being upgraded, Authorware recently began shipping a powerful new version of Authorware Professional for Windows. The company is working with Silicon Graphics Inc., makers of the new Indigo multimedia workstation and the popular IRIS graphics workstation, to develop a version of Authorware Professional for Unix (APU) by late 1992; SGI will in turn bundle APU run-times with all its workstations.

Does this mean any Authorware application will automatically run on a Macintosh or Windows PC, or a Unix workstation? Not yet, says Colligan. “If you want it to run on multiple machines today, you have to develop on the Mac,” he says. “Our intention is to move onto a cross-platform file format that will open in any environment.” He’s hoping to have the new format finished by the time the Unix product is shipped.

The company has also agreed to license certain technologies, which Colligan declines to name, to IBM Corp., and it intends to develop a new “horizontal” multimedia product jointly with the computer giant.

INFILTRATING THE DEVELOPMENT COMMUNITY

Though to date Authorware’s success has been based on custom applications in the corporate environment, Colligan has what he calls a “wild hypothesis” that as authoring tools become more powerful and capable, they will move from the corporate desktop into the commercial titles development community, which today uses custom tools almost exclusively for media-based titles development. In fact, he says, Jostens Learning Co. — a $160 million software firm — is already using Authorware to develop a new line of Macintosh LC applications.

He believes that authoring systems will follow the same track as electronic computer-aided design (ECAD) tool companies such as Cadence Design Systems and Mentor Graphics. (Joe Costello, former president of Cadence, is an Authorware director.)

In the mid-1980s, Colligan says, virtually every chip company — Toshiba, Matsushita, Siemens, Motorola, Intel — spent tens of millions of dollars a year funding internal development of proprietary design tools. “Companies like Cadence and Mentor Graphics would say to them, ‘Why? Isn’t your business designing chips, not tools? We’ll out-R&D you over time, so do a strategic partnership, invest some of those millions with us’,” says Colligan.

The ECAD companies then used those investments to catalyze product development into an overall design framework that allowed customers to snap in whatever proprietary tools they deemed necessary. In turn, the chip firms were able to focus on creating innovative, quality silicon.

Paradigm match. As a result, the ECAD industry consolidated, and most chip companies dropped their internal tools development. Colligan thinks the same process will happen with authoring tools for multimedia.

Today, he says, developers spend a fixed amount of money annually — whether their title costs $3,000 or $300,000 to develop — on in-house tool development, money that he believes (for obvious reasons) would be better spent with companies such as Authorware that specialize in such tools and can invest the time and money in perfecting them.

“The Broderbunds and Jostens of the world are the new electronic publishers — they really have the clout to commercialize content,” says Colligan. “John Kernan [chairman of Jostens], for example, did not want to continue to fund in-house tools development. And Broderbund doesn’t use anyone’s tools today. They talk about performance — for its new interactive books, they’ve created a way to really make them jump off the page. In time, I believe that companies like Broderbund will pay one percent of their revenues to a company [like Authorware] who can actually provide these tools and put its run-time on every system, and who can also work in partnership to create proprietary tools that fit into our framework.”

As a result, Colligan forecasts that Authorware’s Professional Services group, which now accounts for 30 percent of its revenues, will shift its focus over the next five years. Though today the group trains corporate customers on how to create custom applications, Colligan believes it will move toward providing hooks into Authorware for proprietary features that mainstream titles publishers don’t want to entrust to a generic authoring tool. “We can tell them, ‘Keep your proprietary code — here’s the application interface to plug into our framework’,” he says. “As a result, we’d only need one person internally, versus the ten we need today to implement proprietary tools.”

If that’s not enough … Authorware wants to be a publisher, too. Toward that goal, the company has created a New Media Publishing group to develop interactive titles, initially for the Macintosh and the Multimedia PC.

The group, headed by Authorware vice president Katie Povejsil, wants to publish tutorials, simulations and reference materials in the $200-500 price range, and Colligan hopes (admittedly aggressively) that by 1996 the company will derive 25 percent of its income from the new group.

“As Tom Corddry from Microsoft says, there’s only a bundled market right now,” says Colligan. “But he also said, ‘Maybe next year we’ll be able to sell them on their own,’ and I think he’s right.”

To move ahead, Colligan says, Authorware is looking for a publishing partner — “like a Time Warner” –as well as investment capital to keep its overhead manageable. But the company has some fundamental problems to deal with on the road to everywhere.

GETTING UP TO SPEED

First is performance, a problem that plagues all developers of media-based titles. Though the concept of a single, customizable authoring tool is a seductive one, developers are concerned that adding the extra layer of an authoring system on top of an already difficult situation — manipulating data-intensive media types via operating systems still designed primarily for text and numbers — might not be worth the effort.

“There’s nothing inherently reprehensible about using authoring tools,” says Doug Carlston, president of Broderbund. “The question is whether you sacrifice too much because of speed and memory usage to make it efficient. If you can avoid those two problems, there’s no intrinsic reason to not do it. But those problems are substantive. I wouldn’t want to say that nobody could ever solve them, but they’re real.”

Colligan agrees, but he hopes that part of the future will take care of itself. “What I’m hoping is that some of those things will be solved by the progress in hardware,” he says. “But they might not be solvable by one party. If we improve our architecture, we’ll get more performance on the desktop. At the same time, CD-ROM access times will get cut in half, the processors go forward in their inexorable march toward incredibly fast speeds, and it works itself out.”

A more immediate problem Authorware faces is its limited ability, to date, to do effective, complex frame-based animations and graphics handling. Today, customers must use outside tools such as Autodesk Animator or MacroMind Director for such animations, which are then converted to the Authorware format. Colligan doesn’t believe this is a big deal. “The whole concept of Authorware and a lot of these other tools is to have an open architecture to support the importing of other data formats,” he says. “In our Windows product, we purposely decided not to ship a sound editor because there were already two or three good ones out there.”

He says customers can simply buy another, more suitable tool to create animations or graphics more to their liking — an attitude that’s slightly disingenuous coming from a company that charges $8,000 for its software.

In any case, Authorware marketing director Joe Fantuzzi says the problem won’t exist for long. Digital video support is on the way, and Fantuzzi says the company has also acquired outside technologies in order to embed more sophisticated animation and graphics tools in Authorware applications.

An ambitious strategy. Despite Authorware’s noteworthy success in the corporate market, it’s clear that the company’s new direction is not a sure-fire win. Software developers have long prided themselves on being able to wrestle a computer’s shortcomings to the mat by sheer programming prowess, and they are much more likely than Authorware’s present customers to balk at relinquishing control, in whatever degree, to a high-level tool.

In addition, more companies are entering the authoring arena, and it’s a little early in the multimedia game to call who will win a pitched battle for the hearts and minds of these developers.

But Authorware has proven itself in the hard-to-please corporate world, despite its products’ high price tags, and its success has given it the confidence to sally forth with such an ambitious strategy. Its industry partners are lending impressive support, and developers won’t argue with the large installed base that’s likely to result from the company’s multiple, significant bundling deals.

Lastly, its efforts to become truly ubiquitous are not only important to its financial success. In a world full of disparate computers, operating systems and data standards, a commitment to cross-platform product development and deployment is a welcome sign that Authorware, unlike too many developers of media-driven products, is actually considering what will make life easy for its customers. The real question is whether Authorware will stop short of fully realizing that final, most important goal.

Denise Caruso