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The following is an exerpt from an article by Jeff Schewe

Photoshop is the best selling pixel editing program and the standard of many industries. It has been a huge revenue source for Adobe Systems Inc. But Photoshop’s beginnings were humble, and if it weren’t for the tendency to procrastinate by a certain University of Michigan graduate student, Photoshop might never have been developed.

tomBack in the fall of 1987, Thomas Knoll, a doctoral candidate in computer vision, was trying to write programming code to display gray-scale computer images on a black-and-white bitmap monitor. The code was called “Display.” Knoll wrote it on his Mac Plus computer at home as a diversion from his doctoral work. Because it wasn’t directly related to his thesis, Knoll thought it had limited value at best. Little did he know that this code would be the very beginning of the phenomenon that would be known as Photoshop.

JohnKnoll’s program caught the attention of his brother, John, who worked at Industrial Light and Magic in Marin County, California. ILM was the visual effects arm of Lucasfilm, the famous motion picture company founded by George Lucas. With the release of Star Wars, Lucas had proved that really cool special effects, combined with heroic characters and a “shoot-em up script,” could produce a blockbuster motion picture. To that end, John was experimenting with computers to create special effects. He asked his brother Thomas to help him program a computer to process digital image files. Display was a great starting point.

So began their collaboration.

John arranged to purchase a new Macintosh II, the first color-capable model, through his father, a professor at the University of Michigan. Before it was shipped to his brother, Thomas got hold of it and rewrote the code for Display to work in color. In the ensuing months, Thomas and John worked on expanding Display’s capability. At John’s urging, Thomas added the ability to read and write various file formats, while John developed image processing routines that would later become filter plug-ins. Thomas developed the unique capability to create soft-edged selections that would allow local changes. He also developed such features as Levels for adjusting tonality; Color Balance, Hue and Saturation for adjusting color, and painting capabilities.

In the summer of 1988, John thought they might have the basis of a commercially viable product. Thomas was reluctant: “Do you have any idea how much work it is to write a commercial application?” he asked ]ohn. But with his naïve optimism, John convinced Thomas it would be worth the effort. “I’ll figure out how to make money with this,” he told his brother. Well, John was right, but so was Thomas. It did take a lot of work. Photoshop became the program’s working name.

John started shopping around for a company to invest in Photoshop. He called on SuperMac, but financial troubles there precluded any deal. Aldus was already working on something in-house. Although Adobe was interested, nothing could immediately be settled. Thomas remained in Ann Arbor, Michigan, fine-timing the program, while John traveled all over Silicon Valley giving program demos. He kept pushing his brother to add new features. John even wrote a simple manual to make the program more understandable. Finally he succeeded in attracting the attention of a scanner manufacturer. Barneyscan decided that the program would be of use to people who owned their scanners. A short-term deal was worked out, and the first public iteration of the software was introduced as “Barneyscan XP.” About 200 copies of the program, now in Version 0.87, were shipped with their scanners.

Around this time, John demonstrated the program to engineers at Apple computer. It was a huge hit. They asked John to leave a couple of copies; there followed the first incident of Photoshop pirating. It seems that the engineers shared the program with some friends.

Subsequently, John returned to Adobe for another demonstration. Russell Brown, Adobe’s primary art director, was blown away by the program. He had just signed a non-disclosure agreement with Letraset, to view their new image editing program, “ColorStudio.” He was convinced that Photoshop was better. Timing is everything. With a great deal of enthusiasm, Adobe decided to buy the license to distribute Photoshop. It was September 1988 and the Knoll brothers and Fred Mitchell, head of Adobe Acquisitions, made the deal with a handshake.

It would be April before the final legal agreements were worked out. The key phrase in that deal was “license to distribute.” Adobe didn’t completely buy-out the program until years after Photoshop had become a huge success. It was a smart move on the Knolls’ part to work out a royalty agreement based upon distribution.

After the legal agreements were signed, Thomas and John started developing a shipping version. Adobe decided to keep the working name Photoshop. Thomas wrote all the code for the application in Ann Arbor. John developed and wrote plug-ins in California.

Between April 1989 and the official release of the program early in 1990, development continued, with no official beta testers. At Adobe, Russell Brown and others worked with the program and made suggestions. Thomas would write and then rewrite the code, while John, Russell, and Fred pushed him to add features. John was particularly good at coaxing Thomas to make improvements.

Finally in February 1990, Photoshop 1.0 shipped.