Thomas and John Knoll: the brothers behind the magic
Back in 1987, Thomas Knoll was working on his Ph.D. thesis as part of his studies on image processing at the University of Michigan. He had bought a new Apple Mac Plus to help with the thesis, but was frustrated by the fact the computer wouldn't display greyscale images on the monochrome monitor. This issue wouldn't stop him and so he decided to write his own code in order to be able to see the images in his new computer.
His brother John was coincidentally working for ILM (Industrial Light and Magic) on image processing at the time and discovered Thomas' code during a holiday visit. Clearly impressed by his brother's achievements, both began collaborating on a bigger application which they named Display.
Shortly after buying a color Macintosh II, John asked Thomas to re-write Display for color images. Thomas was happy to obligue: soon he would develop new features such as levels, color balance and hue and saturation controls, as well as what would later become plug-ins in addition to gamma correction and options to save in other file formats.
Display was renamed Image Pro in 1988 and the two brothers decided it was time to try and sell it to the public. During the process of searching for investors, the software changed names to Photoshop. However, no one is entirely sure of how this came to be.
Adobe enters the scene
Adobe was the only company showing any interest in Photoshop, but unfortunately a working deal was not feasible at the time. However, the brothers managed to get a short term deal with a scanner manufacturer and bundled their software with the scanners under the name Barneyscan XP.
John went back to Adobe where Russell Brown, Art Director at the time, was really impressed with Photoshop and convinced the company to take it on. Photoshop was released on its first version in February 1990. This video features how the software looked and worked as shown by John Knoll:
Photoshop 1.0 (Macintosh), released in February 1990.
Photoshop 2.0 (Macintosh), released in June 1991. Introduces Paths, CMYK color and EPS Rasterization.
Photoshop 2.5 (Macintosh, Windows, IRIX, Solaris), released in November 1992 and November 1993 for IRIX and Solaris. Introduced 16 bit per channel support. A deluxe version was available on CD-ROM.
Photoshop 3.0 (Macintosh, Windows, IRIX, Solaris), released September 1994, with the IRIX and Solaris versions released in November 1994. This version introduced tabbed palettes and layers.
Photoshop 4.0 (Macintosh, Windows), released November 1996. Introduces Adjustment Layers and Actions.
Photoshop 5.0 (Macintosh, Windows), released May 1998. Editable type, History Palette, Magnetic Lasso and Color Management are introduced.
Photoshop 5.5 (Macintosh, Windows), released February 1999. This version is bundled with ImageReady and introduces Save for Web and Extract.
Photoshop 6.0 (Macintosh, Windows), released September 2000. User interface is updated. Liquify, Vector Shapes and Layer Styles/Blending Options dialogs are added.
Photoshop 7.0 (Mac OS Classic, Mac OS X, Windows), released in March 2002. Text is made fully vector. The Healing Brush is added, as well as a new painting engine.
Photoshop 7.0.1 (Mac OS Classic, Mac OS X, Windows), released August 2002. Camera RAW 1.x is released as an optional plug-in.
Photoshop CS (8.0) (Mac OS X, Windows), released in October 2003. Some of the most notable additions to this version are: support for files over 2GB, real-time Histogram and Smart Guides.
Photoshop CS2 (9.0) (Mac OS X, Windows), released April 2005. Introduces Vanishing Point, Smart Objects and Image Warp.
Photoshop CS3 and CS3 Extended (10.o) (Mac OS X, Windows), released in April 2007. Some of the new features include a revised user interface, Smart Filters, Quick Select Tool. ImageReady is removed.
Photoshop CS4 and CS4 Extended (11.0) (Mac OS X, Windows), released October 2008. This version adds the Adjustments panel, fluid canvas rotation and content-aware scaling among other things.
Photoshop CS5 and CS5 Extended (12.0) (Mac OS X, Windows), released in April 2010. Introduces the Content Aware Fill, Mixer Brush and Bristle Tips among other new features.
Photoshop CS5.1 and CS5.1 Extended (12.1, 12.0.4) (Mac OS X, Windows), released May 2011. Interaction with remote applications is added.
Photoshop CS6 (13.0) (Mac OS X, Windows), released May 2012. User interface is redesigned (including print and 3D UI), with the option of a dark version. Some other features introduced are: Content-aware Patch and Move tools, Auto and background saves and an overhaul of the Vector tools.
The history of Photoshop - Computer Arts Magazine
Adobe Photoshop Version History - Wikipedia