He's Got Kasperskonality

Not many CEOs would use a T-shirt bearing their own likeness as a marketing campaign, but that's just the kind of iconic status Eugene Kaspersky has achieved.

Moscow-based security vendor Kaspersky Lab hands out T-shirts emblazoned with the face of its co-founder and CEO, on which he dons a military beret in an image recalling the classic portrait of revolutionary Che Guevara. "Viruses No Pasaran!" is spread across the bottom of the shirt in bold-faced lettering.

Choosing a T-shirt -- he epitome of low-rent fashion -- as a vehicle for Kaspersky's image provides its own sense of poetry: The man himself notoriously eschews the formal wardrobe preferred by most of his peers. Colleagues say he doesn't even own a suit. More often than not, you'll find him in blue jeans.

Kaspersky is known for his humor and joie de vivre, whether it's acting in a Chaplinesque film short that depicts him dueling black-clad rivals named "McAfee" and "Symantec," or singing and dancing on a torchlit beach during the vendor's recent channel partner conference in Puerto Rico.

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"You can tell that he loves what he's doing, and he really loves security," said Todd Leidner, vice president of operations at Intelek Technologies, a Norman, Okla.-based solution provider. "You can tell how much he enjoys it by listening to him talk. You just learn so much."

In short, he's excessively approachable; he's everybody's buddy and he knows how to inspire loyalty from both employees and channel partners. He is in every way the face of the company: "There is no Mr. Symantec," he points out with a wink.

Driven largely by the force of its co-founder's idiosyncratic quirkiness -- a phenomenon one analyst describes as "Kasperskonality"-- the company has burst onto the security scene, working its way from relative obscurity to now nipping at the heels of its larger, better-known rivals.

Kaspersky Lab is ranked the No. 4 company in end-point security market share, according to research firm NPD Group, and its star is on the rise.

Having gained a strong foothold in both the consumer and SMB security spaces, the company will now focus its Kasperskonality, if you will, on the enterprise with an expanded product portfolio that will start rolling out this spring. It also plans to recruit new channel partners serving all market segments over the next year. In a market where many vendors are cutting back channel efforts under economic pressure, that's no small matter.

The enterprise push comes at a critical time. As malicious threats skyrocketed to 15 million new types in 2008, the fight against cybercrime has become an "arms race" against criminal hackers, Kaspersky said. "In these times there are more criminals, because now there are jobless engineers around the globe that will use this opportunity to get money. That means that there will be a lot of antivirus projects," Kaspersky said, sitting down for an interview with CRN at a Moscow hotel near the vendor's headquarters.

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As part of its comprehensive effort to combat the growing wave of cyberthreats, Kaspersky Lab will diversify its portfolio by enhancing its hosted solutions as well as further developing application protection and management technologies.

The expansion into the enterprise is a big leap, to be sure, and critics wonder if the company's up to the task.

But few can deny that Kaspersky Lab is an up-and-coming company that is taking its place on the international security stage. The vendor's overall security market share has grown from 1.1 percent in July 2007 to 4.6 percent in July 2008, according to NPD Group, in part due to its large consumer presence. As a $360 million antivirus company, it now places fourth behind Symantec, McAfee and Trend Micro. The latter, as the lowest-ranking of the "Big Three" security companies, garners around 6 percent of the market.

And its growth hasn't seemed to stop in the face of a global economic crisis. Privately owned Kaspersky Lab was the only security vendor to improve retail antivirus sales in the U.S. in 2008, coming in second behind Symantec in October 2008, at $5.1 million for the month, according to NPD Group.

Eyes On The Enterprise

Kaspersky Lab executives acknowledge that its plan to gain ground in the enterprise space represents a long-term goal, with the bulk of its enterprise product push coming over the next two to five years. But this spring it will take its first steps toward the enterprise with the launch of Kaspersky Version 8.0, incorporating an updated antivirus engine, vulnerability scanner, new heuristic analyzer, policy enforcement capabilities and greater scalability.

As part of its strategy to "scale up and out," executives said they plan to focus their sales on the U.S. market, which currently comprises 19 percent of its global business, as well as on Japanese and Latin American markets.

While the company plans to maintain its core SMB end-point security customer base, executives said that its biggest priority in 2009 and beyond will be that enterprise. Thus far, revenue from the enterprise sector accounts for about 31 percent of the company's total business. But executives are hoping that the enterprise will become Kaspersky's primary target market by 2012.

"The top priority for us for the next year—and next couple of years—is to create real infrastructure for the corporate business and be able to serve [those] customers the same quality of service as our software has [now]," said Kaspersky Lab COO Eugene Buyakin. "I can say for [this] year, it's more important for us than the consumer business."

Buyakin maintained that Kaspersky Lab plans to focus heavily on messaging and Web security solutions over the next few years. And Stephen Orenberg, president of Kaspersky Lab for the Americas, said that the company will also delve into encryption and "device control" technologies, as well as virtualization and application control in years to come, as enterprises continually look for ways to cut costs while complying with regulatory mandates.

But the real testament to the company's enterprise compatibility will be in its ability to deliver managed services, analysts said. The company's goal is to build up and develop its existing service infrastructure to meet enterprise customer needs.

"What we're going to do is provide an infrastructure—tools—for our partners to give them the chance to provide services," Buyakin said. "And during recession time, during crisis time, I think that's a real opportunity for them," he added.

Ultimately, executives said they aim to be on par with the security market share of enterprise competitors Symantec and McAfee within the next three to five years.

However, competitors maintain that while Kaspersky Lab remains strong in the SMB and consumer markets, it has a long way to go before it can call itself a true enterprise player. Market share remains in the low single digits, and the company has yet to develop enterprise-class technologies such as e-mail reputation and Web and URL filtering, which it will then have to incorporate into suites aimed at the larger markets, competitors said.

"[Kaspersky hasn't] really reached the scalability of integrated products to be a top-tier player," said Dan Glessner, vice president of enterprise marketing for Trend Micro, with headquarters in Tokyo. "Having these broader capabilities from a technological perspective is increasingly important."

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And in this day and age, Glessner said, vendors looking to break into the enterprise space are practically required to have strong Software-as-a-Service components in their portfolios.

Meanwhile, critics also said that managed services is one vital area where Kaspersky seems to fall short, and that might just be the Achilles' heel of the company's growth strategy.

"I don't think that cake is fully baked at Kaspersky," said Paul Roberts, senior analyst for the 451 Group. "I think that the channel partners are looking for other revenue opportunities than the vendors that they work with. There's tremendous growth for services-based solutions, and some of [Kaspersky Lab's] competitors have a bigger story around that."

Keeping Partnerships Strong

If there's one thing that channel partners say sets Kaspersky Lab apart from the pack, it's the quality of its channel relationships. As a testament to the strength of those relationships, the company recently garnered the Client Security Software Company of the Year award in Everything Channel's (Everything Channel is the parent of CRN) 2008 Annual Report Card survey of solution providers.

"The ARC award was meaningful because it wasn't the opinion of the distributor or retailer, it was the opinion of the company's partners," said Randy Drawas, chief marketing officer at Kaspersky Lab.

Going forward, many partners expect to face challenges as their customers slash IT budgets and struggle to obtain lines of credit, but they are confident that the vendor will lend a helping hand. In fact, Kaspersky Lab is finalizing a program that extends distribution payments an extra 30 days for creditworthy partners. Kaspersky Lab executives also recently named its first partner advisory council, an 18-member panel comprised of VARs and VADs of "all shapes and sizes" that will help keep the vendor apprised of issues its partners are facing.

Above all, partners said what drew them to Kaspersky Lab was its product quality. But acute attention to detail, personalized support and dedication to the partner community are all factors that make a huge difference, they added.

"Our take is that all the people we meet in the company are great people. They're very dedicated to what they do," said Greg Aker, president of Carolinas NetCare, a Charlotte, N.C.-based solution provider. "They help us secure our customers. They're looking out for them by putting the best security in their product."

For other solution providers, one of the biggest selling points was the fact that Kaspersky Lab doesn't saturate the market with an overabundance of partner recruits. In fact, Orenberg said that the company could limit its enterprise recruitment push to 100 partners in the Americas over the next year.

"Our corporate office is in Michigan, and in our area, they haven't been out there soliciting lots of resellers," said Jason Goelde, CEO of Troy, Mich.-based MBM Computer Systems Solutions. "Everyone who signs up to sell Symantec can sell it. With Kaspersky, they're a little bit more selective."

However, resellers said that while the company has a solid product for small to midsize businesses, it still has yet to figure out its enterprise sales strategy. Partners said that, in particular, the company will be required to ramp up efforts to target C-level executives, and be prepared for a longer, more complicated sales cycle. And a lot of the vendor's entrance upmarket will depend on its branding strategy, which partners say is still lacking in certain areas.

Maple Grove, Minn.-based Cyber Advisors Inc. President and CEO Shane Vinup said that unlike the SMB, enterprise sales are not "just, 'Hey, I use this at home, it works really well.'"

"It takes a different sales style and technique, and you really have to go after it in a different way. So I think they're still figuring that out," he said. "I think they'll take the same strategy they did just entering the U.S. Nobody heard of them four or five years ago. Now they own 4 percent of the worldwide market."