Bye, Bye Borland

After the sale of its development tools division to Embarcadero in 2008, Borland kept only the tools dealing with requirements management and software testing. This didn’t improve its financial situation and finally Borland sold itself to MicroFocus. This was a sad end for a brand that accompanied software developer for more than 25 years. Software requirements have always been a secondary topic in the software development tools world and the trend towards agility hasn’t improved this. Now you can manage user stories with paper cards and a board. Approaches like UML are declining and you will find few items dealing with them in today’s programmers waterhole like dzone.com or stackoverflow.com, The end of Borland is just the symptom that this world is difficult for requirements tools vendors.

Oracle Buys Sun, WMware Buys Spring and You Buy Software

With a little bit of irony, just one year after having bought MySQL, Sun was acquired by Oracle. It is difficult to judge a deal that is not completed yet as the European Commission is still examining the merger. I am however afraid that the business and financial objectives of Oracle will largely lead to the reduction or the end of most of the Sun open source efforts and a serious slowdown in MySQL evolution.

Just after the future of Java becomes a topic of discussion after the deal between Oracle and Sun, WMware decided to acquire SpringSource and to give to this entity a stronger platform to promote the Java language. Since then, SpringSource has launched its Tomcat server version, Enterprise Java Cloud and Spring Roo. Previously it had acquired G2One at the end of 2008 and thus the control of the Groovy and Grails products. It is now surely the most important active player for Java software development tools.

Google is (also) a Software Development Tools Company

Google domination in the search engine world is well known, but as far as developers are concerned, it is amazing how Google is quietly occupying more and more space. Here are some of the software development initiatives of Google:
* Google App Engine
* Google Web Toolkit GWT
* Go Language
* Google open source projects forge
* Google I/O Conference

Google seems to have understood that besides the content, it should also be active in the plumbing that runs the Web. This is why software developers should be interested in what Google does in this area. You could do this following some blogs like the Google Code Blog and the Google Testing Blog. You will see that besides the well-known projects, Google releases a lot of interesting open source tools created by its development team.

Borland entered a nondisclosure agreement with the new suitor and it has granted it access to its accounting books. Among the possible buyer, the name of Embarcadero and Oracle are mentioned. Embarcadero already bought last year the CodeGear division and might be interested for some new tools that will complete its current offer… for cheap. Oracle, who just bought Sun, could seize the occasion to create a more complete offer of software development tools around Java. JDeveloper, the Java IDE from Oracle, was originally build around the JBuilder technology from Borland.

In January, we asked the question “Will Borland Survive Yet Another Crisis?“, now we have the answer. And it is negative. After selling its development tools to Embarcadero in May 2008 and loosing 15% of its workforce and its CEO in January, Borland makes a final step to cancel 26 years of existence as a vendor of software development tools.  Best know for its original Cobol product, Microfocus expands with this acquisition its portfolio of software development tools. The same day, it acquired the automated testing products of Compuware.

It remains to be seen what will Micro Focus will do technically with Borland products, that are also mostly the results of former Borland acquisitions, and Compuware solutions. It doesn’t seem to have a lot of overlaps between the new tools and the previous solutions sold by Micro Focus. You could think that Borland and Compuware testing tools are operating on the same market, but most of the Compuware quality offer is targeting the mainframe.

Micro Focus is profitable according to its last detailed financial statements issued in 2008. It is also used to integrate acquisitions as it purchased last year NetManage and Liant in June and July. With these two new purchases, Micro Focus gains access to a new customer portfolio. Consolidating the acquired sales and support organizations with it own staff (or in more crude words: “firing people”), it could achieve what Borland was missing these recent years: profits. The deal could bring short term relief to Borland customers as it lifts uncertainties about the support organization. It remains to be seen if Micro Focus will develop significantly the acquired products or if it will just harvest the revenues from the maintenance fees.

http://www.microfocus.com/

In the past year Borland has often blamed its IDE division to be the cause of this problems, slowing its ambition to be an ALM leader with huge financial losses. In May, Borland finally managed to sell the CodeGear unit to Embarcadero. The financial results of CodeGear are now difficult to estimate, as Embarcadero is a private company. What is left at Borland is a mixed set of products, resulting of some in-house innovation and external acquisitions (Togethersoft, Segue), grouped under the “Application Lifecycle Management” banner. None of the components of this set is considered as a top leader in its specific market and good integration between existing products is always difficult to realize. Trying to sell these type products is more difficult, because you have to reach a higher level in the enterprise than for individual developer products. It is also the type of project that most companies will postpone in a period of difficult economic conditions. Furthermore, this put Borland in competition with bigger fishes, like IBM that purchased rival Telelogic last year, and companies like MKS that have their roots in the ALM market.

It would be a bad thing if Borland fails just after having celebrated its 25th birthday, but if it was already struggling in times where the economy was good, we could fear that survival would be even more difficult in the hard times that are ahead of us. Researching for this post, I found that Borland had already cut 40% of its workforce in 1995 after the resignation of its founder Philippe Kahn, so maybe we should believe that it could be just “another deep crisis” in Borland history, a company briefly knew under the name of Inprise ;o)

Borland full press release

Borland made this announcement the same day that it announced a GAAP net loss of $22.3 million for the first quarter of 2008. Borland has been loosing money for quite a long time, at least since it already tried to sell its tools division at the end of 2006, before setting an independent entity named CodeGear. In 2007, Borland already reported a GAAP operating loss of $61 million for the year compared to a loss of $53.1 million in the prior year.

For 2007, CodeGear reported $57 million in revenue and Borland total revenue were $268.8 million. The price paid by Embarcadero is therefore around 50% of yearly revenues. This could be compare for instance with the price paid last year by IBM to acquire Telelogic, which was around 300% of 2007 revenues. Borland management has been accusing the tool division for dragging down profitability for a long time. It is more difficult today to be active in this market area, when most developers could use free open source solutions like Eclipse or NetBeans. Even commercial editors like Oracle or Microsoft offer a free basic edition of their IDE. With this transaction, we will finally able to judge Borland’s management on its ability to develop the other products (Silk, Caliber, StarTeam, etc.)

The question is why would Embarcadero buy such an apparently bad business? First, its current product is centered around database development, so there is no redundancy with CodeGear programming tools… but the management could see redundancies in the sales and administration people and cut a large part of the costs. With a “small company” culture, Embarcadero could be used to a more controlled spending that people used to the large pockets of Borland. Due to the price paid, Embarcadero is taking a relatively small financial risk, as it could have more easily a positive return on its investment with CodeGear recurring revenues. Finally, as Embarcadero was until now active on a “niche” market (database tools), it could have been less sensitive to the competition in the IDE segment.

It has to be noted that CodeGear has also made recently good efforts to explore new markets, like PHP and Rails, different from its existing Delphi, C and Java base. This could provide a good opportunity to cross-sell products through existing customer base. I hope that the growth forecasts announced in the acquisition press release will realize for the benefit of employees of these two companies, but I think that the expansion of diffusion of free open source and commercial competing products will make it very difficult to achieve them.

Borland press release

Embarcadero press release