Can Borland ride the life cycle? -- ADTmag

Can Borland ride the life cycle?

By Michael W. Bucken, John K. Waters
May 31, 2003

Borland Software (née Borland International, Inprise Corp. and Inprise/Borland) has legions of software coders to thank for its sometimes improbable survival over the past two decades. Once again the company is trying to change its colors, but this time executives promise not to forget their roots.

Founded in 1983 by the flamboyant Philippe Kahn, Borland has supplied developers with innovative tools -- from the first version of Turbo Pascal through the Delphi client/server toolset to the Java-based JBuilder and upcoming C# Builder offerings. At several points in its history, Borland has tried without much success to expand its business and has found itself on the brink of financial ruin more than once.

Kahn once led an effort to take on Microsoft Office and the late Lotus Suite of applications by kluging together a bunch of acquired products. That effort failed miserably, and led to the eventual departure of Kahn as well as the disastrous Inprise effort. But Borland has survived through the years on the backs of serious developers, and in 1999 was spared the executioner’s sword when Microsoft bought $25 million in Borland stock and then agreed to pay the firm $100 million to settle a number of lawsuits.

Today, Borland executives tout the firm’s solutions for the so-called development life cycle that join its traditional tools offerings with technologies gained via several acquisitions, including last year’s buys of Starbase and TogetherSoft. “For the first time, Borland offers solutions for every phase from design and analysis to testing, deployment and management,” said President and CEO Dale Fuller (left) of Borland’s latest effort to expand its development tools business.

The Starbase and TogetherSoft deals closed in January, and by the end of the first quarter, “the sales force had already gained traction” selling “enterprise” tools, maintained Fuller. “The application life-cycle strategy is already opening doors at more senior levels [of corporate management],” he added.

Borland could offer an integrated package early due to prior technology relationships with both TogetherSoft and Starbase. “The aim now is to innovate through deeper integration of the products,” explained Fuller.

The plan also includes support for multiple platforms -- namely Java and .NET -- which Borland and outside observers say gives the firm a leg up against Rational, a primary competitor due to its acquisition last year by IBM, one of the major platform players.

Team Borland

Clockwise from top: Tony de la Lama made Java big and is now overseeing the TogetherSoft unit; Chief Scientist Blake Stone and visionary guru Peter Coad watch the tech trends; Fred Ball measures acquisitions; and Frank Slootman oversees the production of all software lines.

“We know that control in this industry is an absolute illusion,” said Borland Chief Scientist Blake Stone. “You can lock customers in for only so long before they get wise to you. And the problem is that during that period you don’t have the incentive to make sure that you still have the best technology out there. So, we have abandoned the illusion of control, we’ve made sure that we are motivated to maintain this best product in the market, and we’ve made ourselves the ally of change. That’s what happens in this industry. You can’t be around for 20 years and hold the status quo in place.”

To the enterprise

“It’s a realistic plan,” said Mark Driver, an analyst at Gartner Inc., a Stamford, Conn.-based consulting firm. “This moves them away from being a best-of-breed tactical vendor, where they have traditionally been very strong, to the enterprise. Part of the problem for a long time has been that Borland has been perceived as a company that could disappear over time. They are trying hard to get roots in the enterprise to avoid that [fate]. With Rational’s acquisition, Borland is one of the few independent vendors left.”

Analyst Thomas Murphy at the Meta Group, a consulting firm also based in Stamford, Conn., noted that he holds out hope for Borland’s latest effort as the firm has had extensive technical and marketing relationships with both Starbase and TogetherSoft, easing efforts to integrate products. And, said Murphy, the multiplatform story -- “Java, .NET, CORBA and Linux” -- lets Borland target any enterprise not tied to a single platform provider.

Nonetheless, Borland did not meet its own first quarter financial goals, which can be blamed on “the digestion of the two acquisitions [of Starbase and TogetherSoft] and expense cuts not proceeding as rapidly as necessary,” said Damian Rinaldi, an analyst at First Albany Corp., an investment banking firm in Albany, N.Y. “The company has a lot of interesting pieces of technology to work with, and a market opportunity that’s compelling -- the neutral player in development that’s not captive to any platform provider,” Rinaldi said. But the company does still face “integration and digestion issues” that can be resolved.

Borland reported sales of $74.4 million for the first quarter, up from $57.1 million in Q1 last year, along with a first quarter deficit this year of $17.7 million vs. a Q1/2002 profit of $4.6 million.

Officials do allow that integrating the acquired firms into Borland is a difficult task. “Keep in mind that we did not just buy a company,” said Borland Chief Operating Officer Doug Barre. “We bought two of them and increased our staff by 50%. It wasn’t a small thing to get those organizations integrated in one quarter.”

Added Fuller: “The first time we were able to get the entire sales force together was February 1. We had only eight weeks after that to combine the companies, get everyone working together and deliver the numbers.” He said that had the deals been completed in December 2002, as first projected, “the extra four weeks would have made a big difference to us.”

Borland is now bringing out a new line of development tools for Microsoft’s .NET environment dubbed C# Builder, a new version of the JBuilder Java toolset, while working quickly to build technology to unify these tools and the C++ Builder tools. The C# tool, code-named Sidewinder, and the new JBuilder version were unveiled last month.

Creating synergy

Fuller joined the firm in April 1999 to clean up the mess resulting from an earlier effort to conquer the enterprise development business by acquiring multiple middleware technologies -- Visigenic and Open Environment Corp. -- and changing the company’s name to Inprise Corp. in June 1998. The plan of then-CEO Del Yocam called for a concentration on middleware, the then-new Inprise Application Server and services. Yocam resigned less than a year after the name change.

The initial goal of Fuller, a one-time Apple Computer executive who headed a couple of Internet firms during the dot-com boom, and his team was to fix the firm’s weighty financial and technical woes and then sell it. And just 10 months after taking over the helm, Fuller agreed to a $1 billion deal to combine forces with Corel Corp. and concentrate the new firm’s efforts on Linux. That deal fell apart three months later amid a dramatic decline in Corel stock and finances.

“At the time, there was so much distress in the company that we came in to fix it and find a buyer,” conceded Vice President of Corporate Development and Mergers and Acquisitions Fred Ball, who joined the firm with Fuller. “But through the process of fixing it we realized there were some real opportunities to grow. We started to hire good people [who became available as the dot-com era imploded] who worked well with the good people we had and all of a sudden we created a synergy engine that fed on itself.”

When Fuller took over, Borland was for the nth time on virtually every analyst’s and observer’s list of software companies unlikely to survive the new millennium. “I remember reading an article that said reviving Borland would be like trying to breathe life into a corpse,” Fuller told ADT. “I guess I took that personally.”

New management also found that the moniker Inprise Software never quite became distinct as an entity among either its traditional coder customer base or the new enterprise IT target. Like the “artist formerly known as Prince,” the Inprise name was usually followed by “formerly known as Borland.” The company gradually backpedaled, first changing the name to Inprise/Borland several months later, and in January 2001 it dropped the Inprise tag altogether.

Upon joining Borland, Fuller said that within months the “fix-up-and-sell” strategy began to change for the new management team. “What I saw [at Borland at that time] was very similar to what I saw at Apple,” recalled the one-time programmer. “This company had extremely loyal customers who had made a choice to stick with the company through all this stuff, even when the last administration said ‘We don’t want you anymore.’ That’s the real testament to the technology that was built here, and to the technologists that built it. These tools changed the world for those developers. They could do things they couldn’t do before.”

And thus began a string of acquisitions to fill out the product line that culminated with last year’s agreements to buy Starbase, a maker of configuration management and requirements definition and management toolsets, for about $24 million; and TogetherSoft, a maker of multiplatform analysis and design tools, for about $185 million in cash and stock.

The new products were immediately bundled with existing Borland offerings to provide packaged toolsets while engineers got to work on “elevating the integration of the software to the next level,” Fuller said, which will include “touchpoint and menu integration” and “the ability to start off one product from within another.”

Observers say the new .NET offering coupled with IBM’s purchase of Rational gives Borland a significant opportunity to penetrate large development organizations. “Borland has technology on both sides of the .NET vs. Java battle,” said Gartner’s Driver. “Gartner believes a lot of companies will be using both. Rational had been [selling tools to such customers] before its acquisition, but the overall perception now is that they are moving away from Microsoft.”

Officials at IBM’s Rational unit maintain that the firm continues to offer strong .NET products. Eric Schurr, marketing VP at the Rational unit, noted the firm’s late May simultaneous unveiling of the new Rational Extended Development Experience (XDE) design and development tool versions for both Java and .NET.

The Switzerland of toolmakers

Borland has been creating development tools for Microsoft developers almost from that company’s beginning. From DOS to Windows, and now to .NET, Borland’s MS tools have been evolving with the platform. The companies, in fact, share some common traits. Important Delphi team members jumped ship and went to work on key Microsoft efforts, including C#. In fact, some people now see the 1999 Microsoft settlements as somewhat centered on that episode.

According to Simon Thornhill, general manager of Borland’s .NET Product Group, the firm’s newest IDE is part and parcel of its current strategy of accelerating the application development life cycle in a multiplatform world.

“We have always concentrated our efforts on accelerating development for the developer,” Thornhill said. “In the past, we did it by combining an editor, a compiler and a debugger into an IDE. Then we added the component library and visual designers to manipulate that component library, creating what we called a RAD IDE.

“In the next phase, we are combining the IDE with design, test and deploy tools to accelerate, not just development, but the complete life cycle,” added Thornhill. “That’s the direction that C# Builder is going on the .NET side, and that’s the direction JBuilder is going on the Java side.”

By basing C# Builder on the standards of the Windows .NET Framework, its creators were able to give the tool a high degree of compatibility with Microsoft’s own Visual Studio .NET development environment. “I think that this is crucial as we look at the marketplace,” Thornhill said. “There’s a lot of Visual Studio already out there, and there are going to [be] many existing VS projects.” Because C# Builder is so closely aligned with the Visual Studio tool, they can share source code, Thornhill said.

Michael Swindell, Borland’s director of products and technology, admitted that the company would like to win over existing Visual Studio developers with the new C# tool, but he said the company expects it to appeal primarily to a particular subgroup of VS users.

“We’re not aiming to supplant Visual Studio,” Swindell said. “It’s [aimed at] the VS developer who lives in a mixed environment, who is building larger-scale enterprise applications that need to integrate. We’re addressing a particular need, and there’s a pretty good subset of Visual Studio developers who are looking for this.”

“We see a mixed world out there of .NET and Java,” added Thornhill. “.NET is very strong on the client pushing up through the departmental server to the data center. With Java, it’s the opposite: very strong in the data center, and strengthening in the department, but relatively weak on the client. Customers that we speak to want to be able to use Web servers for a loose coupling of those, but they also want this tight integration for certain applications. What we want to provide is the flexibility to have Web services access the business logic, or have this tight coupling to CORBA or J2EE.”

George Paolini, hired away from Sun Microsystems early this year to take over the firm’s Java business unit, said Borland is “betting the company” on the integrated life-cycle management technology. “I think the concept resonates not only with a technical audience, but with a business audience. They both see the value of it.”

The strategy provides developers with a much-needed “portal” into the application development life-cycle process, said Paolini, vice president and general manager of the Java Business Unit. Utilizing a set of tools for designing, developing, testing and deploying applications, the just-released Version 9 of his unit’s JBuilder toolset can now pull developers back to provide a “big-picture” view of a project, a view not traditionally accessible to hands-on developers, Paolini said.

“The amount of communication you need between design and development is just staggering,” Paolini said. “And so a lot of what we’ve done with JBuilder 9 is tight integration with Together to create what we call ‘lifesource synchronization.’ Through that integration, the source code can be reflected in the design elements, and design elements can literally change the source code. In addition, you have the ability to launch directly from JBuilder all of your Together modeling capabilities.

“So now you’re beginning to see the idea of the developer having a portal into the process,” Paolini added. “They can see the definitions, the requirements and how they’ve been modeled. It gives them a context for building the application.”

Borland extends that context to the testing process with its Optimizeit performance profiler. “We now start to say that you, as a developer, have more responsibility than just throwing code over the wall and saying ‘I did a pretty good job.’ You actually need to start looking at that code and asking: What are the performance characteristics of this application and what can I do to fix them?,” said Paolini.

Afloat in Java

Over the course of the late 1990s, the company parlayed a stubborn foothold into a lead position in Java IDEs with its JBuilder toolset, a product line many observers say has kept Borland afloat during its strategic shift of the past couple of years. At the head of that push was Tony de la Lama, a 14-year Borland veteran who recently moved from Scotts Valley, Calif., to Raleigh, N.C., to head up Borland’s new Together Business Unit, while Paolini moved into his old post. De la Lama oversees TogetherSoft stations in Raleigh, Prague, Czech Republic, and St. Petersburg, Russia.

Observers credit de la Lama with playing an important role in maneuvering through the waters of Java, which sometimes seemed unfavorable to Borland. In the early going, a deal to license JBuilder code to Oracle led to a distinct -- and now competitive -- offering known as JDeveloper. At about the same time, some observers saw Borland bogged down in porting Java tools to run on the Sun platform just as initial reviews faulted the Borland JBuilder set. “There were a lot of starts and stops along the way,” said de la Lama, who noted that Borland was one of the first licensees of Java and co-authored the original JavaBeans component model.

In the early days, for Borland, the Java IDE battle was with Symantec, maker of Visual Café. “We had been fierce competitors in the IDE market,” said de la Lama, “and they came out with a Java product first.”

But Symantec turned its back on IDEs, and Visual Café was spun off. Backed by BEA and a venture capital group, Visual Café became the product and company WebGain; however, it eventually faded away, with some of its final parts sold to TogetherSoft and some to Oracle prior to its acquisition by Borland.

Ironically, Borland’s de la Lama sees the paths that proved to be pitfalls for competitor WebGain as the paths to success for JBuilder.

“After Symantec sold Visual Café to WebGain, they set out to build the entire application life cycle [into the product line]. But they made a few mistakes along the way. They ignored the environment that the developer was in day in, day out,” claimed de la Lama. They bought too many products and did too little integration, he suggested.

“We watched, and we knew that if we tightly partnered, built or acquired [useful add-ons], Borland could be competitive,” de la Lama said. When the smoke cleared, Borland’s Java effort had to be deemed a winner. Last year the company licensed JBuilder technology to longtime competitor Sybase, which tried for a number of years to field a Java toolset under the once-high- flying PowerBuilder moniker.

Like others in Borland, de la Lama is ready to point out that the company made a solid hit with its Delphi RAD tools, first released in 1995, near the end of the client/server era dominated by Powersoft, Gupta and Microsoft. Lessons were learned in that effort. “We applied expertise gained with Delphi to the Java world,” he said.

Meanwhile, de la Lama sees the TogetherSoft acquisition as critical to Borland’s next stage of growth. “Borland has been very successful in providing development tools for developers. But we didn’t fill in the application development life cycle,” he said. The company posits definition, design, development, test, deployment and management as key links in that chain.

“We prided ourselves on doing great compilers,” said de la Lama, speaking of the company’s vaunted roots, “but even though we used these things ourselves, we ignored the [application development life-cycle] market.”

Fuller promises that Borland will not forget its roots and will continue to concentrate on keeping its bread-and-butter developers happy.

“A lot of our competitors have to sell million dollar deals,” Fuller said. “They say, ‘I can’t even talk to you if you aren’t spending $5 million.’ Many of them have to get the customer to throw everything else away. We have a completely different philosophy. We’re just as happy to sell a $3,000 package to an individual developer. We love those guys. They’re our bread and butter. They’re our doorway into the enterprise and, eventually, they grow into $100,000 customers.”

“The biggest asset that doesn’t sit on this company’s balance sheet is our users,” said COO Barre. “Internally and fondly, we call them the ‘Borland Nation.’ Those are the 3 million to 5 million people who use our products day in and day out. But they’re different from, say, a Microsoft Nation. They won’t go anywhere else.

“We understand that asset. We communicate with it, we nurture it, we grow it,” explained Barre. “We do everything possible to make sure that we don’t lose it. Because it’s that asset -- those users -- who make the stack vendors beholden to Borland. IBM cannot ignore the million people in the world who use JBuilder, even though they may make a competing product.”

With reporting by Jack Vaughan

Please see the related story “Two-headed analyst tour” by Jack Vaughan