07.22.05
Still Standing
When you look back on Borland’s history, it’s amazing they’re still around. Excluding giants like IBM, Microsoft, Oracle, CA, or SAP, there are few 20+ year-old software firms still standing.
IBM, Microsoft, Oracle, CA, and SAP have endured because they are software platform plays. They dominate at least one or more of the basic software building blocks of the enterprise, from OS to office desktop, enterprise back office, or data center security. Once they’re in, it’s hard to yank them.
But what about Borland? For years, they’ve been known for great development tools. The fact that Borland continues offering Delphi, a beloved 10+ year-old fourth generation client/server language deemed friendlier than Visual Basic or PowerBuilder, proves the company still draws a cult following.
However, thanks to standards like J2EE and Microsoft .NET, programming tools can be replaced at will, and have become a dime a dozen (or free if you use open source). Today no publicly held company can survive on tools alone.
Not surprisingly, since the early 1990s, Borland has tried diversifying, usually with horrendous results.
1. The early 1990s acquisition of Ashton-Tate (makers of the early PC database
program dBase) almost killed the company.
2. The 1998 acquisition of middleware provider Visigenic caused Borland to miss the Internet wave because its CORBA-based technology was rendered obsolete by J2EE the following year. Consequently, BEA, not Borland, reaped the spoils.
3. If Borland actually allowed Corel acquire it in 2000, we wouldn’t be having this conversation today because Corel’s shares subsequently crashed and burned.
In 2002, Borland made what should have been smart acquisitions of TogetherSoft and Starbase. They provided the company a stable of application lifecycle management (ALM) products more modern than Rational’s. At the time, it looked like Borland was bulking up for battle, recruiting George Paolini of Sun Java fame, plus a number of key Rational middle managers who defected after the IBM acquisition. The only problem? The company couldn’t retain the account teams of TogetherSoft and Starbase, meaning nobody was left who knew how to sell the ALM products. And within a couple years, Paolini and the Rational crew were history.
So we’re interested in a proposal being developed by dissident Borland shareholder and former director Bob Coates to break up the company, spinning off the tools and middleware to concentrate solely on ALM. We agree with him that Borland is a small company with too many products, and could use more focus. There are a couple major challenges. First, it would be a 100% break from its developer heritage. Secondly, the survival odds of single-product companies are long.
But that’s OK because, with new management and focus, Borland could seize an opportunity so far ignored by IBM to offer a unified ALM suite that works off a common engine (outside the margins, IBM has neither updated or integrated Rational’s 10+ year old engines) while tapping new opportunities created by Microsoft’s Visual Studio Team System. Better yet, a slimmed down healthier Borland would make a great acquisition target for Mercury, which is building up an enterprise business based on governance of existing software applications.