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By | Gavin Clarke 21st July 2006 00:57

Buyer nailed down for Borland tools biz

Near done deal

Borland Software has found a buyer for its development tools business, although the company will not - as was expected - take a stake in the new firm.

Borland is expected to announce a deal during the next few weeks having picked a buyer from a shortlist of three candidates narrowed from 10, sources told The Register. The deal is believed to be worth between $100m and $150m.

A spokeswoman for Borland said a deal hadn't been signed but talks were "nearing full completion." Borland's goal has been to wrap up the sale by September.

A deal represents the culmination of five months' worth of work by Borland to balance limited finances with a desire for growth.

The company has chosen to ditch its JBuilder, Delphi, C++ and C# tools, plus a high-performance application server, and dedicate itself to the vogue of helping customers squeeze performance from their existing applications, and of making applications meet business needs in areas like regulatory compliance.

Offloading tools should help Borland focus resources on a single market - enterprise customers and business users - rather than being torn between this group and developers - a constituency that has less individual spending power. The deal will also see Borland focus on engaging with its new customer base using a costly direct sales model.

While Borland has pledged the 300 staff members of DevCo will continue building products like JBuilder and Delphi, it remains to be seen what exactly the new owner has in mind. Additionally, the pressure will be on to turn tools into a profitable business using things like subscriptions and services at a time when licensing revenue on tools is being challenged by the availability of "free" tools like Eclipse, and entrenched high-quality, charged-for products like Microsoft's Visual Studio.

For Borland, the challenge becomes to succeed in a market delineated by well-resourced big names IBM and Computer Associates, and Mercury Interactive - a company which makes up for its lack of size by having a healthy mind share. In an indication of early strategy, Borland has decided to double down on its more profitable regions - UK, France, Germany and the Benelux states - and close down offices in low-spending markets.®

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