Check Point Branches Out

President Jerry Ungerman says small branches could be next big thing

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Every big company with an Internet presence needs a firewall. Unfortunately for Check Point Software Technologies and other leading suppliers of firewall technology, every leading company has bought one by now, or so it seems. Despite heightened interest in security technology, sales for Check Point dipped $40 million in the first quarter to $104.6 million. Undaunted, the independent world leader in firewall and VPN technology is broadening its focus to new customers and new product lines. That includes small-business customers, wireless solutions and other ideas. Check Point president Jerry Ungerman explains why he believes new thinking is reshaping the company.

VB: Check Point, traditionally an enterprise-centric player, has made moves into the SMB space. Outline your strategy.
Ungerman: We've dominated the enterprise space. It's been our focus since Day 1. We're considered the de facto standard for both firewalls and VPNs in the enterprise space. It's a very good market and will continue to be a very good market, and it's where our channels have grown up. But we are going to move into a number of new market segments. We've brought out a new product called the Sbox, which combines a firewall into a hardware appliance. The combination of the two sells for less than $300. The response has been overwhelming. It truly is applicable to the remote and branch offices of our large enterprise accounts, where they may have hundreds or thousands of offices with three or four employees. Our initial success has been with a reseller over in France that has now bought thousands of them, going after doctors' offices, lawyers' offices,whatever. It's just an exploding opportunity.

VB: Distribution?
Ungerman: We got down to the $2,000 price point one year ago. Well, now, we're down to $300. That opens up a whole new market opportunity. We signed a relationship with Tech Data in the United States because they have true access to the SMB resellers, as opposed to our traditional resellers who are very much enterprise-focused. We're adding channel capacity as well as product and technology to go after that market segment.

VB: How is the competitive landscape changing for you?
Ungerman: By moving into these market segments, we now have more competitors and new competitors than we ever had in the enterprise space...But when you really look at the competition, there are more people that have dropped out of the business this year than have come into the business. On the low end, you have SonicWall, WatchGuard and NetScreen. Six months ago, these guys weren't competitors, but now that we have moved into these market segments, we have them as new competition.

VB: What about moving forward? Which parts of the business are you most optimistic about?
Ungerman: Firewalls and VPNs. Those are still the two key core technologies and products. There will be a lot of implementations for extranets. Right now, VPNs are primarily being driven by intranet deployment, tying in remote employees and site-to-site connections. We're starting to see the true displacement of frame relay and dedicated lines, which is making the VPN market much bigger than we ever thought it was, because of the significant ROI associated with a VPN vs. a dedicated line. The next major applications for our VPNs are going to be extranets, where the companies really tie their customers, partners and suppliers into their networks.


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