Frenchman Eats Frog, Chokes to Death: Borland and Phillipe Kahn
From its inception, Borland International was the Animal House of high tech, a group of self-proclaimed software barbarians who broke all the rules and had all the fun. Led by its wide-girthed founder, Phillipe Kahn, a Frenchman who started the company with no green card and very little cash, Borland seemed to lead a charmed life for the first few years of its existence. But the trouble with barbarians is their appetite. They tend to like to sit down at the table, rip off a big slab of meat from a half-cooked haunch, and eat rapidly without properly chewing their food. Combine this unfortunate habit with Kahn's Gallic background and the stage was set for tragedy. Confronted with software's biggest frog, the Frenchman's savage nature got the best of him and he choked to death attempting to swallow what any civilized person would have realized was a very unpalatable amphibian indeed.
The Fall of the Barbarian Empire
(As we pick up our narrative Borland, under intense competitive pressure from Microsoft's Office suite, responds.)
Faced with both pricing and feature disadvantages, sales of Quattro, as well as WordPerfect, 1-2-3, and others, began to sag. Shocked out of his civilized demeanor, Kahn fell back on barbarian tactics. Borland launched an inept series of promotions designed to stop erosion in Quattro sales. The company accomplished the exact opposite instead, destroying the product's credibility.
The first disaster was the Quattro "WinDOS" bundle. The promotion was Kahn's idea, and he insisted on its execution over the strenuous objections of his marketing staff, who feared the promotion would puzzle the market. WinDOS included both the DOS and Windows version of Quattro in the same box. Once launched, it quickly became clear that Borland's Cassandras were correct: WinDOS wreaked total confusion amongst prospective buyers. Some people thought that the WinDOS "product" was a hybrid of Windows and DOS. Some thought it was a DOS product that looked like Windows. Some thought it was a special Windows version of Quattro that ran under DOS. Some figured out the box contained the complete versions of both products.
In addition to being confusing, the promotion proved to be a sales killer. It turned out that someone who wanted the Windows version of the product had little interest in the DOS version and vice versa. Many people took advantage of Borland's generosity to help friends and neighbors handle their spreadsheet needs with a leftover Quattro for Windows or DOS. As one observer noted, "WinDOS worked like a competitive upgrade's evil twin." The promotion was hastily canceled and Kahn, in the spirit of "Le Roi can do no wrong," fired a few of the marketing personnel who had advised against the whole fiasco.
WinDOS was followed by a series of price-slashing campaigns that finished what the earlier promotion had started. Although some of the early price cuts temporarily boosted sales, this soon stopped as the market wised up and tried to calculate just how low Borland would go. The answer turned out to be $29.95 for a product that a few months ago had an SRP of $495.00.
The pricing strategy reached its nadir when Borland actually ran full-page color ads announcing "Quattro Pro. That's like being offered a Lexus for the price of a Hyundai." (Apparently Borland didn't realize that the type of people who actually offer you a Lexus for the price of a Hyundai are often named "Vinnie" and have five Rolexes wrapped around their arms and a car trunk full of TVs they'll sell to you cheap.) Interest in buying Quattro turned to skepticism as people wondered why Borland had to sell it at a bargain-basement price or speculated that the company was looking to dump inventory before unloading the product.
Complicating things further was that as its woes with Quattro grew, Borland saw its clout with the U.S. channel sharply diminish. Quattro had often functioned as a loss leader for Borland, a lever it used to ensure distributors and resellers also carried generous quantities of the company's more profitable but lower selling databases. As the spreadsheet's sales and profitability collapsed, distributors and resellers decided they needed to carry fewer Borland database products and wanted better terms on those they did stock, putting increasing pressure on Borland's bottom line....