Altsys gets a FreeHand - desktop illustration program

Folio: The Magazine for Magazine Management, Sept 1, 1994 by Paul McDougall

Its court battle with former marketing partner Aldus behind it, Altsys Corp. is hoping to defy skeptics and go it alone with its popular FreeHand desktop illustration program.

"No one loves FreeHand more than we do," says Altsys president and CEO Jim Von Ehr. "We will do whatever it takes to see it survive."

FreeHand lets users create elaborate art and designs on computer-generated pages, and was the illustration program of choice for just under half die respondents to a recent Folio: survey of magazine desktop purchasing and use trends (see page 63). Its 1993 sales are estimated at about $23 million.

After developing the software in 1986, the Richardson, Texas-based firm handed over sales and marketing rights to PagerMaker creator Aldus Corp. But the relationship soured when Aldus said it would merge with Adobe Systems, creator of FreeHand competitor Illustrator. "Aldus was in violation of its no-compete clause with us from that point on," Von Ehr, who sued Aldus, but has reached an agreement under which FreeHand's licensing and marketing rights will revert to Altsys six months after the merger.

Under the deal, Altsys also regains the FreeHand customer list. "That's crucial if we are going to have a competitive upgrade strategy," says Von Ehr, insisting he is not intimidated by the thought of competing with a combined Aldus and Adobe, whose combined 1993 revenues came in at more than $537 million.

In fact, he is so confident that he intends to bring FreeHand entirely inhouse rather than seek a new marketing partner. His plans entail big changes at tiny Altsys, whose other products include the graphic arts applications Virtuoso and Fontographer. Most of the $7.5 million company's 50-plus staffers work in research and development, and Von Ehr concedes that, "We would have to bring in some marketing talent."

Others say Altsys will have to work hard to build a new network of international distributors if it is to move into software's major league. "It is extremely important and extremely challenging, says Tim Gill, whose Denver-based Quark Inc. is the market leader in desktop page layout applications for magazines.

Beyond that, observers say Altsys should beef up technical support to avoid a problem that often tarnishes fast-growing software companies - frustrated users who get busy signals rather than answers.

Altsys can ill-afford to alienate Free Hand users-more than half of its 1993 revenues were derived from sales of the program through royalties paid by Aldus.

Von Ehr's optimism notwidistanding, some are Skeptical of FreeHand's chances of competing successfully in a desktop market. "It's going to have a difficult time," predicts Jeffrey Henning, associate director at BIS Strategic Decisions in Norwell, Massachusetts. "Altsys does not have brand recognition, and now it has to compete against what is the strongest graphics software company [Aldus/ Adobe] by an order of magnitude." Henning's advice for Altsys? "Get a new marketing partner."

For publishers, the battle for FreeHand goes beyond corporate politics. Owing to its ease of use and powerful features, the program is significantly more popular with professional users than Illustrator, say many observers. Its disappearance could therefore cause some headaches in production departments. It's an issue that anybody who purchases illustration software for their company needs to pay close attention to,cautions Clay Haberman, who is director of prepress at MacWorld in San Francisco.

Indeed, The Associated Press, one of the largest institutional users of FreeHand, is in the process of deciding whether to upgrade to FreeHand 4.0 (see related story at right), or to switch to Illustrator. The ability of Altsys to single-handedly support the product "is something we have to be sensitive to," says John Monahan director of graphics at the New York City-based wire service. Monahan is equally quick to add, however, that Altsys has a solid track record and that, "I have a lot of confidence in them making a success out of whatever they attempt, however they attempt it."