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2/1/2008
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To CodeGear, From Russia With Love: A One Million Seat Order

The deal is part of a $100 million government initiative, the National State Project of High-Grade Education, which will add computer programming to public education curricula.

The Russian government, with revenue pouring in from oil and gas, wants to use some of its newfound wealth to prepare its students to better compete in the world.

"Technology is the key sector in which they want to be more competitive," said Jim Douglas, new CEO of CodeGear, the unit of Borland that offers languages and development tools.

Douglas knows whereof he speaks. On trips to Moscow, he's encountered the Russian appetite for technology expressed sometimes as a residual affection for CodeGear languages, such as Turbo Pascal. In the mid-1980s, Borland's Turbo Pascal led the way in bringing new developers to personal computers. The language is still in use in some corners of the globe, he said. In addition, parent company Borland maintains a highly valued TogetherSoft development team in St. Petersburg.

Consequently, CodeGear has received an unusual order -- from Russia, with love. It's for a 1 million-seat license for CodeGear languages to be used by the Russian Federal Agency of Education throughout the country's school system.

"Government reports indicate that Delphi [CodeGear's integrated development environment] and Pascal are among the most widely used programming languages in the country," said Felix Muchnik, general director of Softkey, a leading Russian software reseller.

"Use of CodeGear tools is so prolific that more than 6,000 different titles devoted to CodeGear and Borland products have been published for the Russian market," he said in announcing the deal.

The 1 million-license deal is part of a $100 million government initiative, the National State Project of High-Grade Education, which will add computer programming to public education curricula. The schools will adopt CodeGear's Delphi, an independent fourth-generation language in an easy-to-use development environment; Delphi for .Net and C++ Builder.

"The power and ease of use of Delphi makes it ideal for developers of all levels," said Muchnik.

Everywhere I go [in the world], somebody tells me they're still using Turbo Pascal," noted Douglas.

Douglas declined to say what revenue CodeGear will receive from the license deal, saying Borland doesn't break out specific deals, but he said "it was an opportunity that we had been working on for a long while and a leading indicator of what we think is possible." Douglas said India, Russia and China are all likely to prove fertile ground for Borland's tools unit. Programming "courseware" is also included in the deal, he said.

At the end of the third quarter of fiscal 2007, CodeGear represented the smallest of Borland's three-segment business, producing $12.5 million in revenue. Borland is focused on application life-cycle management tools, which yielded $47 million in revenue. Deployment software produced another $13.1 million.

Borland spun out its tools group as an independent business unit in November 2006, naming Douglas as CEO in last April.

CodeGear's most popular modern tool with developers is JBuilder, a development environment, which does not appear to be part of the deal. Douglas said the order covers a three-year timeframe and indicated some part of it was likely to be renewed at the end of the period.

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