Sybase CEO John Chen charts a mobile course

When John Chen joined Sybase 11 years ago as president, he was one of the most unpopular guys in the tech world. Or at least he felt that way.

Sybase’s database software was buggy, the company was a step-behind competitors and its stock had plunged 80 percent between October 1997 and October 1998.

The Hong Kong-born engineer, who became chief executive a year after his arrival, set about the slow task of rebuilding the Dublin-based company. Part of his strategy has been mining the then-nascent mobile software market. Sybase now has annual revenue that tops $1 billion. Last year, the company reported a 179 percent leap in profits. During its most recent quarter, the company reported an earnings uptick of 24 percent.

Its mobile infrastructure software business now accounts for about 30 percent of sales.

Chen, who splits his time between the Bay Area and Asia, sat down recently to talk with the Mercury News about his remake of Sybase and the emerging mobile software market. Here is an edited excerpt of the interview:

Q: You became CEO in 1997. You had your job cut out for you. How tough was it?

A: We were losing money and the products were behind. We were losing market share. Nobody was covering our stock. And any media write-up was negative. It was like a deathwatch. And of course shareholders were very upset at us. Wall Street people are very aggressive. The words they used with me you could not reprint. Their meetings with me were three minutes long. I was this punching bag.

Q: What were the first steps to recovery?

A: I needed to restore the company’s technology leadership. But that’s like a three-, five-year thing. You can’t do it tomorrow. So the important first thing we did was to improve customer support. In the beginning it was very difficult. Nobody wanted to talk with us. I’d go to meetings and the meetings would be canceled. I went to see some big name CIO and he gave me a bug list: ‘These are the case numbers. Rather than giving me a bunch of platitudes, go and fix what you sold us.’

We invested any money we had into customer support. And then I looked for markets that were growing, markets where our competitors were not dominant. The Asian countries, with China leading, needed a lot of infrastructure. They were like 1960s United States. Ten years ago, their banks needed servers just to crunch day-to-day transactions. They hadn’t done anything electronic. We saw that opportunity for basic infrastructure. And a year later, we started making money.

Q: And then you started to look at opportunities in back-end software for mobile gadgets.

A: It was probably about 1999. I thought, ‘We’ve got to be investing in something the customers don’t know they need yet. I’m going to leap-frog my competitors and when the market arrives, we will be there.’ We decided to get into infrastructure for mobility. The (corporate) customers didn’t know then that eventually they would need to build mobility into their IT infrastructure. We patiently invested.

We developed our own code for dealing with signal drops, location-connected architectures, how you sync things. Then we got into device management and security. Now we are getting into messaging. We are definitely the leader in the market and we are growing. We are on every major device out there — Microsoft’s operating system, Apple, Research in Motion (maker of the BlackBerry), (Nokia’s) Symbian, Palm, Linux. When Google announced Android, we said we are going to help them be successful.

Q: What kind of impact has the iPhone had on the mobile-phone market?

A: The iPhone has captured a lot of interest among business buyers. We like it because it has heated up the competition. The smarter the device, the better off it is for me. The more capability of the device, the more applications it has. And that creates a greater need for my platform. The other part is that it is good for us is messaging. We will settle 100 billion messages today.

Q: For a long time, it seemed that mobile-phone innovation came from Europe, and even Asia. Has that changed?

A: If you had asked me this five years ago, I would have told that the technology leaders are in Europe. That has changed. Asia is just a big user. The largest customer base of NTT DOCOMO in Japan are teenage girls between the age of 11 and 16. They keep buying cell phones, they keep texting each other. The consumer space is interesting, but you don’t make a lot of money in it. For enterprise usage, North America is definitely the leader. The U.S. has the applications infrastructure that can take advantage of this.

Q: In Japan, consumers now use their cell phones as credit cards. When do you see that happening in the United States in a substantial way?

A: Probably three years. It’s dependent on the banking infrastructure. It’s not about technology. The question is: Will you buy stuff and pay for it through your phone bill? Or will you pay for it directly through your bank account or a deferred card like Visa? We will be one of the providers of the infrastructure to make it happen.

Q: So you see the era of mobile commerce on the horizon?

A: It’s still very early for mobile commerce. In three years, it will be a really big part of our society. It will be bigger than e-commerce. Today there are 3.5 billion mobile phones out there. You’ll do transactions like paying your bills — phone bills, utility bills, whatever — on a Web-based phone. The next generation will do everything on their cell phones. All businesses will have to deal with this. That’s why all the banks are getting ready for mobile banking.

Q: With all the consolidations in the software industry, do you worry about being a take-over target?

A: No. My job is not to worry about what may, or may not, happen. My job is to create value as we execute our plans. If we build enough value and enough of an ability to be independent — then if someone wants to come after us, they will have to pay dearly. And it will give good value to my shareholders and everyone will be happy. We will have been bought not for consolidation reasons, but for things we do well. One of these days, that may be a reality. Who knows?

Contact John Boudreau at jboudreau@mercurynews.com or at (408) 278-3496.