Borland Finally Finds a Buyer for CodeGear

Embarcadero Technologies will purchase CodeGear from Borland, and plans to continue support for CodeGear products.

It took nearly two years, but Borland Software Corp. has finally found a buyer for its CodeGear developer tools group.

The company last month said it has agreed to sell its CodeGear unit for the fire-sale price of $23 million to Embarcadero Technologies Inc., a leading supplier of data-modeling software.

The proposed acquisition, set to close June 30, marks Borland's official exit from the developer tools arena. For San Francisco-based Embarcadero, the acquisition promises to expand the horizons for the leading provider of database design and management tools.

"The development tools suite complements [our] data tools suite," says Greg Davoll, Embarcadero's vice president of worldwide marketing. "Practically every application that's built has a database at the back-end."

Davoll says Embarcadero plans a three-stage approach to integrating CodeGear offerings. By the end of the third quarter of this year, Davoll expects the company to begin cross-

selling and then bundling CodeGear products alongside its own offerings. The work to integrate CodeGear technology into Embarcadero's expanded portfolio will take longer.

"The product integration requires development teams and code to be written," Davoll says. "But that's kind of the holy grail here. Ultimately we want to have a very integrated tool set."

The deal benefits both Embarcadero -- as it seeks to expand its portfolio -- and CodeGear, as it looks for a safe haven in hostile markets, says Peter O'Kelly, director of research at analyst firm Burton Group.

O'Kelly says Embarcadero was able to nab CodeGear on the cheap. "I mean, 20-something-million dollars is a song these days," he says. "What would it have cost to develop and nurture that expertise internally? It's a fire-sale price."

'Another Lap Around the Track'
The purchase will also help ensure the viability of CodeGear products, O'Kelly says. "Longstanding customers of those traditional Borland products can be confident that they will go another lap around the track, at least. I don't think this is just a buy and kill," O'Kelly adds.

That's great news for loyal Borland and CodeGear developers, many of whom began working with the company's innovative Delphi products in the 1990s.

"I've been using Delphi since version 1.0 and have always loved it. I never understood why anyone would use Visual Basic rather than Delphi," says Matthew Brock, owner of Computer Solutions:AZ in Tucson, Ariz., in an e-mail. "I still use Delphi 6 because I never felt the newer versions were compelling enough to upgrade and it didn't seem they had the developer's best interests at heart. Hopefully, the new owner will change that focus and make it compelling once again."

That's an open question. For Embarcadero, the value of the existing tools business is secondary to what CodeGear can bring to the company's maturing database development tools.

"The whole boundary between database development and application development is blurring anyway," says O'Kelly. "So the expertise Embarcadero picks up here is ... going to have broad applicability -- not just for the CodeGear products, but insights, for instance, with how to work with Visual Studio and how to work with Eclipse. It's a smart move."

Recovering from Disaster
The CodeGear purchase ends a troubled chapter for the one-time dev tools giant. While parent company Borland today focuses on application lifecycle management tools, the CodeGear subsidiary has continued to offer products like Delphi, C++Builder and the JBuilder Java dev tool. The company has also released PHP and Ruby development tools.

Borland put CodeGear -- then the Borland Developer Tools Group -- up for sale in February 2006, but failed to find a buyer. In November 2006, the unit was spun off as a wholly owned subsidiary. O'Kelly says CodeGear fell victim to the double whammy of Microsoft's dev tools dominance and the rise of the Eclipse open source IDE.

"[Eclipse] basically dropped a revenue neutron bomb on anyone trying to build a profitable dev tools business primarily for non-Microsoft developers," O'Kelly says. "The sad thing about it, too, is they've always been a good team. Their market was hit by an asteroid -- actually two asteroids."

About the Author

Michael Desmond is an editor and writer for 1105 Media's Enterprise Computing Group.