CodeGear's Progress, New Products Please Partners

Six months after it began carving out a new identity as CodeGear, Borland's developer tools group has a new management team and a refreshed product lineup.

The company recently announced plans to release a new Ruby on Rails integrated development environment (IDE) later this year, a move that new CEO Jim Douglas hopes will help CodeGear return to the position Borland once had at the vanguard of the developer tools market.

"Ten years ago, the paradigm changed when we invented RAD [rapid application development] and visual component-based development," Douglas said in a recent interview. "Now there are new challenges: the changing nature of team design, open source. How do you productively leverage that? We'll continue down the path where we incrementally add value. Our focus is really evolving with what the user's requirements are."

Borland's Delphi, first released in 1995, was one of the first RAD tools, a new development paradigm that greatly simplified development tasks. Borland's tools, including its JBuilder Java and Turbo C++ IDEs, developed a fan base as loyal as those for Apple's Macintosh or IBM's Lotus. They were much different than anything else on the market and eased application development tasks.

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But Borland has always been a company plagued by management turmoil and strategy flip-flops, illustrated most recently by its announcement it would sell off its developer tools group, followed by a reversal and decision to keep the group as an autonomous subsidiary. In recent years, as Borland acquired and developed to expand into new software markets, its classic developer tools languished.

Meanwhile, the tools market changed radically. Eclipse's popularity as a foundational Java developer tools platform, the growing availability of open-source development tools and Microsoft's Visual Studio advances raised the bar for third-party tools ISVs like CodeGear.

Douglas, who joined CodeGear last month, has the challenge of revitalizing CodeGear's product line plus refurbishing its damaged reputation.

The company hopes its new product road map will help smooth the feathers ruffled by its past actions. Since announcing its semi-separation from Borland, CodeGear shipped an overhauled Delphi 2007 and JBuilder 2007, launched a new Delphi PHP IDE and highlighted its work on C++Builder 2007 (due out in June) and its upcoming Ruby IDE (due out in the second half).

Partners are optimistic about the progress they're seeing. Borland's loyal user base has helped CodeGear retain customers through a period of stagnation that would have felled most companies. Once customers have deployed Delphi, they never want to migrate elsewhere, said Dave Piech, head of sales at Dunn Solutions Group in Skokie, Ill., a Borland partner for more than a decade.

Some partners even argue that there's nothing to "recover" from. "I would reject categorically the characterization that CodeGear is attempting to be revitalized when it is perfectly healthy with plenty of loyal customers," said Joe Mele, managing partner of Delphi add-on software developer Youseful Software.

Others, however, acknowledged that they have suffered from Borland's missteps.

"The CodeGear transition was a rocky one for us. When Borland first announced their desire to spin off their IDE tools and potentially sell off the new division, our component sales essentially stalled," said Jason Southwell, president of Arcana Technologies, a Delphi developer and services firm in Las Vegas. "Since our component sales accounted for about 30 percent to 40 percent of our revenue, that was a serious hit to our company and required letting go one of our best developers."

But Southwell likes what he's seen so far from CodeGear. Delphi 2007 is a solid update that his company has adopted as its primary developer tool, and Ruby is an area crying out for better tooling, he said.

"There really isn't anything good out there today in that space, and certainly nothing as productive as with Delphi's IDE. We will be focusing a lot more attention on Ruby in the near future and can't wait to give the new IDE a try."

Piech, too, likes the direction in which CodeGear is moving. Dunn Solutions has already sold several clients the Delphi for PHP IDE CodeGear released last month.

"Business has picked up recently because of the reinvestment in the IDEs," Piech said. "Nobody wants to invest in a dead language. Delphi wasn't dead, but it was languishing. And this gave them some hope."

Next: CodeGear's Challenge

CodeGear's challenge is to build a business in a market increasingly served by free and open-source offerings. In a sign of Eclipse's growth, CodeGear completely recreated its Java IDE, JBuilder, atop an Eclipse foundation. The company set out to be its own guinea pig and build its new JBuilder the way its customers build Java applications, using agile development processes and the best open-source components it could find, according to Michael Swindell, CodeGear's vice president of products.

"We're not going to put our heads in the sand. We could never get the market reach that Eclipse can. But we have the ability to be one of the premier engines for Eclipse," Douglas said. "Certain aspects of developer tools will and should be free. Other aspects people will continue to pay for if they add demonstrable value."

CodeGear is also adapting by targeting emerging markets, such as the PHP and Ruby on Rails development worlds. But expanding the product line carries risks. Developers still haven't forgiven Borland for releasing and then discontinuing Kylix, a Linux version of its Delphi and C++ IDEs. Ben Smith, CodeGear's interim CEO for several months before Douglas' appointment, said CodeGear couldn't find a viable business model for Kylix.

Swindell said CodeGear won't repeat its past mistakes. "Kylix was a very successful product, just not at the same scale as Delphi," he said. "One of the things we learned as a business is that you have to develop these new markets very agilely. Don't take two years to develop a product; get it out to market and get customers on it," he explained. "Kylix was a very big, expensive technology. For us to do that kind of thing in the future, it needs to be much more agile and lightweight. When we build something like the Ruby on Rails IDE, it's a smaller team."

Douglas is bullish on the Ruby market and thinks it's ready to support a commercial IDE. "We think the big enabler is Rails. We think it's ready for prime time now," he said. "We see Ruby on Rails as an emerging platform as both a Web technology and a potential enterprise technology."

CodeGear's long-term future is still somewhat up in the air. Though Borland retained the group, it did so largely because it couldn't get the price it wanted from private equity groups interested in backing an independent CodeGear.

The rest of Borland is moving away from CodeGear, figuratively and literally: The application life-cycle management company is moving its headquarters to Austin, Texas, while CodeGear remains in Scotts Valley, Calif. CodeGear's executives are carefully noncommittal when asked about how long they expect to say in the Borland fold.

"Operationally, we're very different than Borland," Douglas said.

One way CodeGear is different: It's profitable. Borland's most recent quarterly report, for the three months ended March 31, broke out CodeGear's operations for the first time. Borland as a whole had a loss of $9.2 million on revenue of $71 million, yet CodeGear reported operating income of $1.9 million on sales of $14 million. Since CodeGear has only begun shipping its new products, its early profitability bodes well for the overall health of the business.

"As soon as Borland announced the spinoff [was] complete, we started receiving orders again. In fact, our component sales revenue is approaching what it was before the first spin-off announcement," Arcana's Southwell said. "That indicates to me that customer confidence in CodeGear and their mission is as high as ever."