Executive Summary  

Executive Summary

Why Delphi is losing market share

CodeGear’s Delphi development solution has been constantly losing market share during the last years. Besides problems in the area of product quality, bad marketing and an ineffective distribution chain, the main reason for this according to the available data sources is that CodeGear is unable to provide advantages over their biggest competitor in this field, Microsoft. Back when Delphi owned a significant share over the RAD tool market, this had mostly been due to Delphi offering the Visual Component Library (VCL), something that Microsoft did not provide – basically Microsoft just did not offer RAD.

With the invention of .NET by Microsoft this has changed completely – these days Delphi is not offering any real big key differentiators over the Microsoft offerings. As Microsoft is the one defining the .NET platform, customers feel that as a user of Microsoft’s RAD offerings, they are closer to the source and get better support for emerging technologies.

During the last few years, Borland has tried to make Delphi chase Microsoft’s .NET offering using a “me too” strategy – technologies marketed by Microsoft got copied by Delphi, often with several years of delay, with only very low added value (ECO is such an added value, but not widely known in the market).

So while it indeed might be crucial to the future of Delphi to also support the Microsoft-proposed .NET route, this has clearly made the product lose its key differentiators – Delphi now can at best only be as good as Microsoft’s Visual Studio offerings. It also has brought CodeGear into the situation to now completely depend on Microsoft’s goodwill – which is not a good business situation, especially given the history of how Microsoft treats partners that grow too strong.

The big picture of why a cross-platform strategy is crucial to Delphi’s future

All this leads to the conclusion that the main aspect about a Linux target of Delphi isn’t the short-time revenue this venture might bring from direct sales of such a product. The main aspect is to offer a key differentiator for Delphi as a whole by providing something that Microsoft can not beat you in. The strong advantage about Linux is that it is the biggest competitor of Microsoft’s OS division – they have no option to enter and conquer this market, unlike in the Windows OS area that they own and define. The Linux market is where the best product wins in, which is a good situation for a small company like CodeGear.

Having a key differentiator also is extremely important from a marketing standpoint – it’s something to make the press report about. CodeGear’s new CEO already has experienced this – the press isn’t interested about “me too”-Strategies.

And finally, this also is important to your customers. One of the biggest worries in the Development Community is vendor lock-in – the fear of not having any choices left. This is the main reason Microsoft does not own 100% of the OS and development markets – because businesses around the World are afraid of having to solely rely on the good-will and visions of one single corporation. This is the reason why Java still is so strong – it’s available for all kinds of platforms, which secures the investment into Java source code over a long period of time. Due to way SUN is handling it’s Java platform, it feels much more independent of the OS market.

This also is the reason why so many governmental entities around the world are moving over to Linux, away from Windows and MS Office as you can read in the press every week – because it’s never a good idea to base your whole future on one single supplier.

There is quite a high percentage of Delphi customers who are interested in being able to deploy their Software for Linux today according to recent surveys. But what’s more important than this is that for next to everyone the option of being able to one day move to a different OS platform is a strong selling point for your today’s product offerings.

This is why CodeGear needs to offer a cross-platform option for Delphi. Due to the experience and product development already invested into Kylix, and also due to the rising server market share of Linux, Linux is the most interesting platform as a first step for a long-time cross-platform strategy.

Why a cross-platform strategy is needed today

Why a cross-platform strategy is needed today

It’s important that CodeGear acts quickly on this and gets the message about a cross-platform vision out to the customers and press soon. This is due to the fact that until the end of the year 2006, a lot of customers had been confident that with the transition of Delphi to CodeGear, a Linux strategy would be announced again. This had caused a lot of Delphi customers to hold off their migration plans away from Delphi. Due to the announcement of CEO Ben Smith to the press, the message that CodeGear is not going to provide any key differentiator over Microsoft’s solution has spread extremely fast – after all it has been the only press report about Delphi that got spread world-wide for the last 2 years. Those customers not in immediate need for a Linux strategy now got assured that CodeGear won’t be offering anything Microsoft doesn’t offer, too, and that if they have to bind to the Windows OS platform once and forever, they are better off buying their Development solutions directly from strong Microsoft. And those customers that are in need for a Linux strategy are in the situation that they now need to immediately migrate away from CodeGear’s offering, as the wait for a solution from CodeGear has brought them into a troubling situation of time-pressure.

This makes announcing a cross-platform strategy in a timely manner crucial for the future success of Delphi in the market place it is in.

How that cross-platform strategy could look like

A cross-platform strategy ideally should secure the success of Delphi while at the same time opening doors for a big growth in sales in new markets. It’s important to note that most of the investments needed for that have long been done by Borland back in the year 2000 – the whole technology about targeting Linux with Delphi is done already.

The goal of the strategy should be to recycle as much of the investments done back then, but selling this to a much more interesting and growing market than back with the Kylix product.

This is achieved by dropping the part that caused the biggest cost to maintain: The IDE running under Linux. This document will show in detail that this is the part that your customers care the least about – what most really want is to develop using their existing Delphi/BDS IDE, with the option of applications created in it being able to run under Linux, too.

Therefore an IDE running under Linux is not required – to achieve the goals outlined above, only the core Kylix compiler technology that’s already developed needs to be integrated into the existing BDS IDE by single-sourcing it with today’s Delphi compiler. This will also keep future costs low, as it won’t be a separate compiler that would need to be maintained.

Money could be made by selling this as an additional BDS “personality”, and also by selling a Turbo Kylix product that includes this cross-compiler together with the native Windows one. The full BDS product would be sold including that Kylix personality.

Using this concept, the initial investment into the cross-platform strategy will be minimal. There quickly will be a good ROI due to the Turbo Kylix sales, and CodeGear will open up possibilities to conquer a growing market that’s not dominated by one gigantic competitor alone in the future by marketing BDS using a key differentiator to Microsoft’s Visual Studio offerings.