Quark, Inc. Business Information, Profile, and History

Company Perspectives:

At Quark, our mission is to develop world-class software that keeps you on the leading edge. The Internet has changed everything about the way you do business. Companies that adapt will thrive. Those that rely on outdated tools will be left behind.

To be successful in an increasingly competitive global business environment, you have to know who your customers are, what they want, and the most effective way of delivering enormous amounts of data. How do you cope?

That's where Quark comes in. We're developing an integrated suite of standards-based software solutions that helps you be successful in both print and Internet business, connect you to your customers, collect and analyze data, implement your business decisions, and see the results in real time.

While you've been busy doing your job, we've been busy doing ours. Quark has the tools you need to meet the challenges of the future.

History of Quark, Inc.

Quark, Inc. is a privately held company focused on providing software for desktop publishing. Quark claims that more than one million users in more than 100 countries rely on Quark products to create, design, and manage their document production, including newspapers, magazines, books, CD-ROMs, catalogs, brochures, packaging, and online material. The company's flagship product is QuarkXPress, which was first introduced in 1987 when desktop publishing was in its infancy. Originally developed for use on Macintosh computers, QuarkXPress for Windows was introduced in 1992. The program is the market leader among professional users.

Quark, Inc. was founded in 1981 in Denver by Tim Gill, a self-employed computer programmer who wrote the first word-processing program for the Apple III. He named the company after the subatomic particle designated as the building block of all matter. Gill went on to write a variety of text-processing programs for the Apple platform. In 1986 Fred Ebrahimi joined Quark as president and CEO, with Gill continuing as Quark's chairman and chief technology officer. Ebrahimi bought out Gill's original partner for $100,000 and became half-owner of the company, along with Gill.

Introduction of QuarkXPress for Macintosh Users: 1987--92

QuarkXPress was introduced in 1987, at a time when desktop publishing was in its infancy. The program offered precision typography, layout, and color control on a desktop computer. It was initially published only for use on Macintosh computers.

QuarkXPress and the coming desktop publishing revolution represented a low-cost alternative to proprietary typesetting systems.

In its reviews of QuarkXPress, MacUser said, 'QuarkXPress is a superb product that represents a major step forward in the evolution of desktop publishing.' Priced at $695, QuarkXPress advanced what Macintosh users could do with presentation text and graphics by incorporating features such as proper kerning, using display-size typefaces, and flowing text and graphics more easily. The program made 'true, professional quality page layout easy,' according to MacUser. MacUser also noted the 'extraordinary control' users had over the look of text on the page.

Competing with QuarkXPress was Aldus Corp.'s PageMaker 2.0, which was priced lower at $495. Aldus had introduced PageMaker in 1986; it was the first full-featured page make-up program to appear. While early desktop publishing (DTP) programs enabled Macintosh users to design professional looking reports, brochures, and other documents, they contained many limitations. Word processing was often clumsy, it was difficult to format text around graphics, and creating lengthy documents was troublesome. To some extent, PageMaker 2.0 and QuarkXPress addressed these limitations.

Although both programs imitated the way that people accomplished page make-up and publishing, PageMaker and QuarkXPress differed in a fundamental way. PageMaker approached text in terms of columns and galleys, while QuarkXPress asked users to establish blocks or areas on a page into which text or graphics might be placed. The former method imitated book publishing, while the latter copied advertising or display page composition.

In 1988 Quark went international, establishing customer service and technical support offices across Europe and the Far East. In mid-1998 Quark introduced version 2.0 of QuarkXPress. It was the first DTP program capable of performing color separations of four-color line art on the Macintosh. Priced at $795, version 2.0 was aimed at professional graphic artists and others involved in newspaper or magazine publishing. The program was developed jointly with Adobe Systems Inc. and could perform color separations on files imported from Adobe's new drawing package, Illustrator '88. Other new features in version 2.0 were style sheets for formatting pages and a 'cut, copy, paste' option for moving text or graphic elements. MacUser noted that QuarkXPress was showing a steady growth curve and that desktop publishers were choosing it over PageMaker and Ready, Set, Go!. The magazine called version 2.0 'the most professional page-layout package for the Macintosh.'

In 1989 Quark introduced QuarkStyle, an inexpensive ($295) and scaled-down version of QuarkXPress. The program came with 72 templates and style sheets and was aimed at the business user who did not need all of the more sophisticated features of QuarkXPress.

At the Seybold Seminars of March 1990, a semi-annual publishing industry conference and exhibition where software companies launched their new publishing products, Quark announced version 3.0 of QuarkXPress for release in April. The upgrade offered a pasteboard feature for manipulating text and graphics. It also added a thumbnail view of documents that let users move and manipulate pages within a document. In addition, the program's color separation features were enhanced.

In its review of version 3.0, MacUser said the program 'sets a new standard for Macintosh desktop publishing.' It noted the program had several 'wonderful new features' and that 'the interface has been brilliantly redesigned.' The program featured three new tools for rotating objects, creating irregularly shaped picture boxes, and zooming the page image. It contained all the major features of PageMaker 4.0, except indexing and table of contents creation.

At the fall 1990 Seybold Computer Publishing Conference, Quark announced it would partner with IBM to develop a version of QuarkXPress for Windows 3.0 and OS/2 and with Steve Jobs's NeXT for its UNIX-based systems. Quark anticipated developing both stand-alone and LAN versions of the program for IBM. The planned release date for the Windows and OS/2 versions was the third quarter of 1991.

QuarkXPress 3.1 for the Macintosh, scheduled for a fall 1991 release, added color, style-sheet, and trap palettes. The price also increased to $895. During the past year QuarkXPress had gained significant market share on PageMaker, whose 4.0 version was heavily criticized, requiring Aldus to come out with PageMaker 4.01 to fix the bugs in version 4.0.

QuarkXPress for both Windows and Macintosh Platforms: 1992

PageMaker dominated DTP software for Windows with a 61 percent market share in 1990. Ventura Software Inc., a subsidiary of Xerox Corp., was the other major DTP software publisher for Windows. Quark's introduction of QuarkXPress for Windows was delayed beyond its 1991 launch; at the end of 1991 it was still in beta testing. In 1992 the Windows DTP market had an installed PC base of 70 million machines, compared to about five million Macintosh computers. In addition to Quark, Frame Technology Corp. planned to introduce a DTP program for Windows.

By mid-1992 a 12-month delay in the introduction of QuarkXPress 3.1 for Windows was causing doubt about the product among analysts and testers. The delay gave Aldus more time to make improvements in PageMaker, including the development of Aldus Additions, a set of features that could be added on to the basic version of PageMaker. Quark had been first to offer a similar program, called Quark Xtensions, which enabled third-party developers to build add-on products for QuarkXPress.

In the fall of 1992 Quark again delayed the release of QuarkXPress 3.1 for Windows until December. Reviews appearing in InfoWorld and PC Week in December praised the program for successfully migrating from the Macintosh platform to Windows. The target audience for the program was the professional art director who needed to produce tight layouts quickly and efficiently. Many of the program's production-oriented tools made it easy to transfer documents from the PC to a commercial printing press. Competing programs for Windows included PageMaker 4.0, Ventura Publisher 4.1, and the newly introduced FrameMaker 3.0 from Frame Technology Corp.

In 1993 Aldus released PageMaker 5.0, which offered many improvements in areas where QuarkXPress had been superior. PageMaker 5.0 had more than 100 new features, including support for Windows' Multiple Document Interface, which allowed users to open and work with more than one document.

Quark countered with QuarkXPress 3.2 for Macintosh in mid-1993, with a Windows version scheduled for later in the year. This major upgrade, again priced at $895, featured built-in color separation, faster performance, and support for vertical scaling from 25 to 400 percent of any object's original height.

In 1992 Quark began developing the Quark Publishing System (QPS), a network software package that sold for $100,000 and up. Designed for work groups rather than individual users, the QPS combined QuarkXPress with programs to keep track of assignments, articles, revisions, page layouts, and photographs for large networks of computers used by book, magazine, and newspaper publishers. Quark's strategy was to move beyond its competition with PageMaker for Windows and Macintosh users, which was based primarily on introducing new versions with new features.

From 1991 to 1993 Quark doubled its workforce from 200 to 400 employees. Sales for 1993 reached $120 million, up 50 percent from 1992, with about 60 percent of sales coming from Europe. In 1994 the company announced job opportunities for 100 new employees, including several senior management positions.

At the fall 1993 Seybold San Francisco trade show, Quark announced it would produce QuarkXPress 3.3 for Windows and Macintosh by the end of the year. QuarkXPress 3.2 for Windows remained unreleased, and customers were concerned whether Quark would meet its December 1993 ship date for version 3.3. Quark was planning a simultaneous release of the Windows and Macintosh versions. However, translating the program into different languages for its international version, which supported eight languages, delayed the release of version 3.3 until later in 1994.

In 1994 Quark announced a scaled-down version of its Quark Publishing System editorial management software that would be priced at $7,500, plus an additional $3,000 for six months of technical support and training. Quark also increased the capacity of its full-size QPS with version 1.1, which allowed 100 users per server and could track more than 10,000 individual page files. The company also announced it was exploring the technology to make QuarkXPress a multimedia authoring tool that could incorporate audio and video into text documents.

Meanwhile, the competitive landscape was changing. Ottawa-based Corel Corp. acquired Ventura Publisher from Ventura Software in 1993, and in 1994 rival Aldus Corp. merged with Adobe Systems Inc. The merger of Adobe and Aldus would make it easier for Adobe to bundle its software with PageMaker. Adobe produced an electronic document interchange program called Adobe Acrobat, which became the industry standard, as well as several well-known programs for typesetting and design such as Illustrator, PostScript, and Photoshop.

Competition with Adobe Heating Up: 1995--2000

In 1995 Quark announced plans to launch Xposure, an image editor designed to compete with Adobe's popular Photoshop program. At the time Photoshop had an estimated 90 percent market share on the Macintosh and 50 to 60 percent on Windows. Quark's multimedia authoring tool, code-named Orion, was also under development. Orion was anticipated to be a new Xtension for QuarkXPress that would let users import audio, video, animation, and hyperlinked text into QuarkXPress documents.

During 1995 reports appeared in the Denver Business Journal that Quark was planning to go public, in spite of repeated denials the previous year by company founder Tim Gill. When asked about plans to go public, Gill's response was that Quark had more than $50 million in cash and did not need to go public to raise money. In spite of the firm's explosive growth during the first half of the 1990s, the company experienced high personnel turnover and low morale in 1995. The releases of Xposure and the new Quarklmmedia multimedia authoring software were both delayed. As of April 1996 the development of Xposure had encountered serious technical problems and was not yet in beta testing. Quarklmmedia went into beta testing in February and was due for a mid-1996 release.

In an effort to boost sales of the high-end Quark Publishing System, Quark entered into a strategic partnership with Digital Equipment Corp. that gave it access to Digital's existing relationship with Fortune 1000 companies. Introduced in 1992, QPS had an installed base of only 140 sites by 1996, and editorial management systems in general were not being adopted by magazine publishers.

In 1996 Quark purchased a minority interest in Colossal Pictures of San Francisco. Colossal produced and designed films using a wide range of techniques, including live action, cel animation, photo and stop-motion techniques, motion control and clay, and computer and performance animation to produce commercials, cable programming, CD-ROMs, and interactive movies. The investment was seen as part of Quark's strategy to diversify its software offerings. In 1997 Quark acquired mFactory, which made a multimedia authoring package called mTropolis.

DTP Software and Web Authoring Features: 1997--2000

With web site developers becoming dissatisfied with simple HTML to create web pages, desktop publishing and multimedia software companies were working on advanced web authoring software. Among those involved were Quark, Adobe, Corel, Macromedia Inc., Autodesk Inc., and Microsoft. Meanwhile, Adobe released PageMaker versions 6.0 in 1996 and 6.5 in 1997, the latter incorporating new web capabilities that were tempting QuarkXPress users, who had not had a significant update in six years.

QuarkXPress 4.0 was in beta testing during the first half of 1997 and released later in 1997 with a price of $995. The release of version 4.0 returned Quark to the top of its category, although it did not offer the multimedia capabilities found in PageMaker 6.5 and Ventura 7.0. New features in version 4.0 included indexing, automatic list and table-of-contents generation, and a variety of new tools for integrating text and graphics. With their latest versions, PageMaker and QuarkXPress became more directly competitive, with each program including filters that allowed users to import files from the other program. QuarkXPress remained the market leader over PageMaker among professional desktop publishers.

At the beginning of 1998 Quark acquired Coris Inc., a subsidiary of R.R. Donnelley and Sons that made Coris Publisher 3.0, which had multimedia capabilities. Coris engineers would join Quark to develop content-management software for new applications. Around this time Quark closed the doors on the recently acquired mFactory, saying that its technology appealed to too small of a user base.

Much of 1998 was taken up with Quark's short-lived takeover bid for Adobe Systems. The offer was made in August, just after Adobe announced it would cut 300 jobs, or ten percent of its workforce. Adobe's stock price was also depressed, having lost more than half its value over the past year. Adobe, with 2,700 employees compared to Quark's 500, flatly rejected the offer, and Quark soon announced it would not pursue the acquisition of its larger rival.

The company did acquire a majority interest in Silent GmbH, a German software developer. It also entered into a joint marketing agreement with Sun Microsystems. In another agreement with Corel, the two companies agreed to bundle QuarkXPress 4.0 and CorelDraw 8 into a new product called The Professional Suite, with a suggested list price of $1,095. Quarklmmedia version 1.5 was released toward the end of 1998. The company also announced that sales of QuarkXPress had reached two million units worldwide since its introduction in 1987. Meanwhile the installed base of the company's high-end Quark Publishing System was growing, due in part to new marketing efforts, and would reach an installed base of 500 sites by 2000.

In 1999 Quark was developing a dynamic web publishing system under the code name Troika. Other products under development included a workflow-management and layout application for catalog publishers that was code-named Cypress. Anticipating a new professional-level DTP program from Adobe called InDesign, Quark offered a preview of QuarkXPress version 5. The upgrade would include four new functions: a built-in table editor, document layers, HTML export, and PDF import. Meanwhile, Adobe was offering InDesign to Quark customers and users of other Adobe products for the special price of $299.

Later in 1999 Quark announced a partnership with Vignette Corp. of Austin, Texas, to integrate Vignette's StoryServer with QuarkXPress. The package offered a new web-to-print solution and was put into beta testing in September. The new package, avenue.quark, took a QuarkXPress document and converted it into XML, thus easing the transfer of the document to the web.

As of mid-2000 Quark was circulating demo copies of QuarkXPress 5, but it was unclear whether the upgrade would incorporate Adobe's PDF technology, which was the basis for Adobe Acrobat. PDF made it possible for a document to be retrieved electronically and arrive in a readable format, regardless of software specifics. QuarkXPress 4 included some limited PDF capabilities, and Quark had promised a full-featured PDF engine in version 5. However, its rivalry with Adobe made it unlikely that Adobe's PDF would be built into the new version of QuarkXPress.

Quark remains a company focused on the professional DTP market. Although its new releases have been plagued with delays, they have been well received by customers and reviewers upon their release. Quark has demonstrated its ability to incorporate the new features that its high-end customers want in their professional desktop publishing software. Its challenge will be to maintain its leadership position against traditional competitors Adobe Systems and Corel Corp. as well as new competitors serving the web publishing environment.

Principal Subsidiaries: Quark France S.A.; Quark Scandinavia ApS (Denmark); Quark Deutschland GmbH (Germany); Quark Japan K.K.; Quark Systems Ltd. (U.K.).

Principal Competitors: Adobe Systems Inc.; Corel Corporation; Microsoft Corporation.

Chronology

• Key Dates:

• 1981: Quark, Inc. is founded by self-employed computer programmer Tim Gill.
• 1986: Fred Ebrahami buys out Gill's original partner and becomes Quark's president and CEO.
• 1987: Quark introduces QuarkXPress, a new desktop publishing program for the Macintosh computer.
• 1992: QuarkXPress for Windows is released.
• 1997: QuarkXPress 4.0 is released.