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Borland Finally Finds A Buyer For CodeGear

Ending a nearly two-year effort to rid itself of its development tools unit, Borland Software Corp. today said it has agreed to sell its CodeGear unit for $23 million to Embarcadero Technologies, a leading supplier of data modeling software.

The proposed acquisition, set to close June 30, marks Borland’s official exit from the business by which the company was founded and arguably set the stage for the third party developer tools market.

For 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," said Greg Davoll, vice president of worldwide marketing for Embarcadero in. "Practically every application that is built has a database at the back end."

Davoll said 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 said. "But that's kind of the Holy Grail here. Ultimately we want to have a very integrated tool set."

Peter O'Kelly, director of research at the Burton Group, said the deal benefits both Embarcadero as it seeks to expand its portfolio and CodeGear as it looks for a safe haven in hostile markets. O’Kelly said Embarcadero got a real bargain.

"I mean, 20-something-million dollars is a song these days,” he said. “What would it have cost to develop and nurture that expertise internally? It's a fire sale price."

The purchase will also help ensure the viability of CodeGear products, he added. "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 said.

O'Kelly said the purchase will help Embarcadero navigate the blurring boundary between database and application development, and offer insight into how to work with popular IDEs like Visual Studio and Eclipse. "It's a smart move," he said.

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 development tool. The company has also released PHP and Ruby development tools.

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

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

About the Author

Michael Desmond is the founding editor of Redmond Developer News. Contact him at mdesmond@reddevnews.com.

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