This paper outlines a case study at SGS-Thomson Microelec-tronics on the development of a firmware development environment in cooperation with Thomson Consumer Electronics Components. The enviornment is for an embedded processor used for audio decompression algorithms including: MPEG2, Dolby AC-3 Surround, and Dolby Pro-logic. The enabling component of the firmware environment is a retargetable compiler which maps high-level algorithms onto the embedded processor. Although compilation is the critical technology, this experience has shown that it is insufficient and that other supporting design tools are also important. For this project, that environment includes an instruction-set simulator, a source-level debugger, a custom linker, and a compiler validation strategy. The methodologies are outlined in this paper with an emphasis on the lessons learned in this hardware-software team development.