Beyond the Firewall: Check Point's Next Move

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Although he'll never say it like this, Gil Shwed's body language and demeanor speak louder than words: "Critics be damned."

No matter which way you cut it, his company, Check Point Software Technologies, is the No. 3 security player. If you're talking about perimeter security and firewalls, it falls behind Cisco Systems and Juniper Networks. If you're talking about pure-play security companies, it lags behind McAfee and Trend Micro in terms of gross revenue. And its primary rivals--Cisco, Symantec, Microsoft, Juniper--are multidimensional companies with security and nonsecurity products, something that analysts say better positions them to deal with changing market conditions and offer more holistic solutions to partners and customers. Also, Check Point is increasingly fending off attacks from smaller, more midmarket-focused companies, such as SonicWall and Fortinet.

"There's not a lot of innovation there, and we're all getting worried about it," says Bruce Tucker, president of Patriot Technologies, a Frederick, Md.-based Check Point VAR. "We're talking to other vendors, but we're trying to stay loyal to Check Point. We try to stay loyal to the vendors we started with."

CEO Gil Shwed shrugs off Check Point's rivals.

None of this deters CEO Shwed. In fact, he promises a new era for Check Point: total data protection, something that definitely takes the company out of its firewall comfort zone.

Over the next three years, Check Point will build a portfolio that protects data from compromise wherever it resides--at rest, in use or in transit. The first step in this process is the $625 million bid for Pointsec Mobile Technologies, which provides critical encryption for mobile devices.

Data protection may be not only a wise move but a necessary one. In the early days of the Internet, Check Point's firewall revolutionized network security with its strong stateful packet-inspection engine and intuitive management console. The later, integrated firewall/VPN made a powerful combination.

Agile, innovative and revolutionary are words few people use to describe Check Point today. In fact, one security luminary said, "It's strange for us to be talking about Check Point as an also-ran."

A recent Infonetix market report placed Check Point behind Juniper in network security sales, making it third in the market. Similar reports show the sales and demand for software firewalls slowing, with integrated firewall and security appliances--those offered by Cisco, Juniper (NetScreen) and SonicWall--on the rise.

Check Point does enjoy a strong relationship with Nokia, which sells embedded Check Point software on its appliances.

"The overall perimeter-security market is growing. Check Point is maintaining a good share," says Greg Young, a research vice president at Gartner. "I don't see them in decline, but there's more competition now."

Shwed shrugs off the market numbers. What's important, he says, is Check Point's security focus and goals.

"They've diversified out of security, not focusing more on security. None of our competitors have survived," he says. The merger of Symantec and storage-software-management innovator Veritas Software, Juniper's acquisition of NetScreen Technologies and IBM's purchase of Internet Security Systems are examples of security companies cited by Shwed that lost their security focus. "If you look at the marketplace, there are fewer independent companies to compete with us."

NEXT: Why Juniper and Cisco think Check Point is vulnerable

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