Alien Landing

By Janice Castro

He is as comfortable blasting away on his saxophone at raucous company parties as he is gabbing with clients and hackers late at night via his personal computer. Whether he is conducting business meetings in the back room of his favorite Chinese restaurant or totting up profits of his best-selling computer programs, Philippe Kahn, 33, the unconventional founder and president of Borland International, relishes his self-styled role as the "Crazy Frenchman" of the software business. And while other executives bemoan their industry's slowdown, Kahn, whose sales have zoomed from zero in 1983 to an estimated $30 million this year, simply says, "I don't feel the slump."

Low prices are Borland's secret. By selling business software for less than $100 in a field where competitors charge $500 and more for programs, Kahn has given new meaning to the term user friendly. The company outlined its philosophy in one of its latest ads: "We're not greedy. We believe that it is better to sell hundreds of thousands of software programs at a reasonable price instead of a few at prices that would make Jesse James blush." Even at his prices, Kahn claims, Borland makes a pretax profit of 40%. Says he: "The actual material of a program costs less than $5. Most business programs cost between $300 and $500. This is kind of a rip-off. I'm trying to do things differently."

The flamboyant Frenchman has been doing things differently since he arrived in California in 1982 looking for a job in the computer industry. A former mathematics professor at the University of Grenoble, he was bubbling over with ideas but lacked the crucial green card that would permit him to work legally in the U.S. Since no one would ask him for his work permit if he ran the operation, he decided that it was easier to start his own company. A single ad in Byte magazine for Turbo Pascal, a $49.95 program that he designed primarily for computer professionals, triggered sales of $150,000 in the first month.

A flurry of popular products, including Sidekick, an organizing aid for executives, and Turbo Gameworks, for chess and bridge buffs, followed. Kahn soon collected all the touches of the Silicon Valley good life: a Porsche, a 37-ft. sailboat and a lavish home equipped with a family-size hot tub for his wife and two children. Last month, with his bustling company now ensconced in new quarters, Kahn finally found time to correct the status of his residency in the U.S. After flying home to France, where he has become something of a national hero in absentia, Kahn stopped by the U.S. embassy in Paris and picked up the papers making him a legal alien.

While Borland's strategy has not yet pulled down prices industry-wide, at least two major companies have discounted programs competing with Borland products. Last summer Lotus Development (1984 sales: $157 million) cut the price of its Spotlight program, which competes with Sidekick, from $150 to $75. Microsoft (fiscal 1985 sales: $140 million) is now offering customers a $40 rebate on its rival Pascal software. Still, Microsoft President Jon Shirley scoffs at the notion that his firm will have to match Borland's prices any time soon. Though software may be expensive, he argues, the quality of programs has steadily improved, adding more value for the money. Says he: "There's no tremendous pressure from customers on prices."

That may change if Kahn continues to supply innovative software at bargain levels. After Borland in September acquired Analytica, it slashed the price of the software maker's Reflex program, a sophisticated database tool for executives, from $495 to $99.95. Reflex is now selling some 12,000 copies a week. This week Borland begins shipping Turbo Lightning Library (price: $99.95). Billed as "the most amazing information system since your brain," the program monitors spelling as the user bangs away at the keyboard. If the person misspells a word, the computer goes beep, and a small window appears on the screen. The program then offers a sample of words with similar spellings. Stuck for a better word? Turbo Lightning will suggest several synonyms. For bonehead English students who would be driven mad by all the beeps, Turbo Lightning can also be told to wait and review the spelling at the end of the page. --By Janice Castro. Reported by Cristina Garcia/San Francisco

With reporting by Reported by Cristina Garcia/San Francisco