French 'teddy bear' has moved Borland to forefront of software industry


July 22, 1991|By Lee Gomes | Lee Gomes,Knight-Ridder News Service

Scotts Valley, Calif. A few years ago, he was the zesty French teddy bear who peddled a couple of fast computer language programs and a nifty executive organizer -- and whose dreams of software grandeur were met with amusement and occasional condescension from the rest of the industry.

No more. Today, Philippe Kahn, the 39-year-old founder, president and chairman of Borland International Inc. in Scotts Valley, is near the top of the industry's very short list of People Who Matter.

With its purchase last week of Ashton-Tate Corp., Borland became a $500 million company, one of the largest in the personal computer software industry and one of the few capable of influencing its direction.

Behind Mr. Kahn, Borland has achieved remarkable success in three of software's four major product categories by marrying pioneering technology with eye-popping marketing. Think of it as a cross between Xerox PARC and Nintendo.

The Borland formula is simple: Develop a hot product and then use "Go for it, dude!" as your main sales strategy, mixing discount prices, boast-filled advertisements, (which Mr. Kahn often writes), mass mailings and boiler-room phone operations.

And if the market leader you're going after has an "unbeatable position" -- well, so much the better. Torrance, Calif.-based Ashton-Tate found that out at the cost of its corporate life, and as Lotus Development Corp. of Cambridge, Mass., is finding out at the cost of its dominance of the spreadsheet marketplace.

Along the way, Mr. Kahn, a former mathematics teacher, stumbled upon Kahn's Corollary: that the defense against becoming fat and happy is staying purposefully trim. It's a modus operandi that brings with it enough strategic freedom to make archrival Bill Gates downright apoplectic, as the Microsoft chairman confided in a once-confidential memo to his top staff in May.

Borland has spent all of its eight years competing against firms such as Microsoft and Lotus in the world of personal computer software, dividing sales about equally among its language systems for computer programmers, its Quattro Pro spreadsheet and its Paradox database package.

Now, though, Borland has set out on the toughest corporate challenge of its life.

It is undertaking a major expansion of its database line not only by swallowing Ashton-Tate and its huge installed base but also by targeting the world outside the personal computer: the huge, profitable corporate database market, which runs on minicomputers and similar machines and which is dominated by such firms as Oracle Systems Corp. of Redwood City, Calif.

To enter that world, Borland needs to develop new technologies and new marketing skills, all the while holding onto its current franchise and managing the problem of reducing Ashton-Tate's 1,700-person work force and absorbing what's left into Borland.

Taking out Ashton-Tate, its one-time rival, cost Borland about $440 million in stock -- and drew mixed reviews.

Analysts said that with its momentum in the database marketplace, Borland was buying what it would soon own anyway. Picking up all of Ashton-Tate for some of its subsidiary companies -- a Borland claim -- was like buying a car to get a front seat, they added. And some predicted the buyout would swamp Borland's top management with acquisition-related diversions from the main corporate mission.

"Yeah, I've heard all that," Mr. Kahn said. "Everything. Even that we're committing euthanasia with Ashton-Tate."

In high technology, he explained, timing is everything, and Borland couldn't afford two more years of "blocking and tackling" with Ashton-Tate while facing a real battle over "downsizing." That involves the move by corporate data keepers away from the minicomputers where Oracle gets much of its $1 billion in revenues and toward Borland's home turf: desktop personal computers and new generations of machines, like the one the IBM-Apple joint venture plans to build.

Mr. Kahn said Ashton-Tate's Interbase subsidiary, which has some of the complex technology that Borland will need to compete with Oracle, was the "crown jewel" of the purchase, and there will be enough fallout from the rest of the purchase, such as overseas distribution, to justify its cost.

As to Borland becoming unfocused, Mr. Kahn said, "I just won't let it happen," adding that he has heard reservations about his management skills since Borland was a $10 million company.

Another explanation for the Ashton-Tate purchase was that Borland wasn't at all concerned about Oracle's world but instead wanted to solidify its position in anticipation of whatever database product Microsoft was preparing.

"You have to be worried about Microsoft," Mr. Kahn said. "Anything they want, they can get. Microsoft wants to be a billion-dollar database company. Well, we'll fight to keep that from happening."

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