SonicWall CEO Breaks New Channel Barriers

As a supplier of security appliances, SonicWall is one of a handful of vendors that is driving significant sales growth for the channel. In an interview with Editor in Chief Michael Vizard and Section Editor Matt Villano, SonicWall CEO Matt Medeiros previews an expansion of the company's product line and highlights the role the channel will play in taking his company to the next level.

CRN: How many SonicWall partners are there today?

MEDEIROS: We have a little over 10,000 partners. But in our Gold and Silver campaigns, we've got roughly 3,000 partners, and those 3,000 partners are really kind of the people that we keep our finger on the pulse of. They generate, interestingly enough, only about 50 percent of our revenue. So that tail, that other 7,000, is still very important to us. We've got to find a way to reach out and attract those.

CRN: Where are the new VARs that are joining your programs coming from?

MEDEIROS: We are pulling in VARs that were selling other products, and maybe you could also say those are VARs that we lost two years before we sort of lost our way. So we may be just getting people back that had at one time vacated us because of our product or because of the leadership in the company. If I looked at the profile, I would call the VARs that are coming from [Juniper Networks] or Cisco network integrators. These people really do have control over the complete network solution, not just the security aspect or the switch or the router aspect of the network. I'm pleased to see that level of customer starting to show up. They are far more demanding to SonicWall on multivendor deployment. They are far more demanding on network monitoring in a multivendor environment. They are far more demanding on looking at the other aspects of the network and the way that our box influences the other aspects of the network or vice versa. I think that they're challenging us in a far better way than, quite frankly, just the security VAR.

CRN: SonicWall held its partner conference this past summer. What did you learn from that event?

MEDEIROS: One of the things that we realized is that we have to spend more time with our partners on what is truly the business proposition of doing business with SonicWall. They need to understand the values of our product, understand how they can convince their customers that there absolutely is a state-of-the-market security choice that is affordable and usable. They need to understand the business proposition for them selling the product.

CRN: What other elements of your channel programs are you looking at?

MEDEIROS: I think that we have to look at our Medal program. Giving people Medal programs or status based on volume and value is perhaps not necessary. We've got to give people status based on [their] ability to support their customers. We've got to give them status on the ability to have service programs that are 24x7. We've got to give them value and opportunity because their installations go flawlessly. Those are the types of things that we're going to start to see in our programs going forward. So maybe every partner gets the same level of discount but perhaps we'll take away some of that margin if the number of support calls from your customers are higher than average. The interesting dynamic that we get from many of the partners is that they embrace owning that customer far more than just the transaction of selling them the box and the firewall.

CRN: What differentiates SonicWall in the channel?

MEDEIROS: One of the things that we picked up is that [we] really do anticipate that SonicWall is going to be delivering even more and better subscription services and they want that annuity stream. In comparison, a lot of our competition does not let the VARs participate in the recurring revenues that they get. In fact, a lot of our competition takes the subscription services on year two to direct, or sells an upgrade in some way, and quite frankly, exclude the channel in that value proposition. What we're saying is that we're fully wedded to the channel including the second, third, fourth, tenth year of a subscription. They deserve to certainly be paid for keeping that customer secure, safe and more productive because of the subscriptions that we sell.

CRN: A lot of your focus is on the SMB space. How do you see the security needs of the SMB customer being different from those of the enterprise?

MEDEIROS: I started our partner program with the three myths of what I call the Internet security industry. The first myth was that clearly viruses and worms can discriminate between large enterprise, small and midsize businesses. What we're doing is realizing that the channel is clearly capable of explaining to their customers that the quality of service that their networks require is not based on the size of the entity.

CRN: What's your take on Cisco's plans to be more competitive in the SMB space?

MEDEIROS: We've heard it all before. But I think it's very difficult for anybody to stand up and say they have a bifurcated sales approach between direct and indirect. I still think that the approach that SonicWall is taking with 100 percent indirect sales through our channel is going to continue to make us the SMB vendor of choice.

CRN: What's next in terms of new products?

MEDEIROS: What I'm most excited about is some of the dedicated appliances that we're going to be introducing in the second half. We've done a very good job of integrating things like content filtering with intrusion-prevention services capabilities. Now if we can start to build dedicated appliances of those products, we can enter into networks that perhaps already have the firewall, VPN or antivirus type of security solution there. We're taking a very practical approach to this from a business perspective. The channel partners told us to eliminate this kind of parochial view that everything has to be centric to the firewall/VPN appliance and we can in fact give you a market expansion opportunity. So we're not going to take a single path. I don't think that there's a fork in the road here. We've developed some elegant solutions that can be sold stand-alone and not necessarily in a SonicWall security network.

CRN: What is SonicWall doing in terms of wireless security, which seems to be the next big growth area in security?

MEDEIROS: We've been a leader in wireless technology. We've actually had two fundamental beliefs. First of all, there should be no compromise to security in a wireless environment. In our most current wireless solutions today, we're the only people that deliver deep-packet inspection on wireless solutions at price points literally below $10,000 to $15,000. We recognize that mobility is critical to productivity and CIO investments in technology, so therefore having no compromise between wired and wireless is a very important part of what we're bringing to the marketplace. The second philosophy is that wireless becomes just a feature. So many times people position wireless as the product. We see it as just a feature, and it's going to mature much more like that in the future.

CRN: Do you worry there may be too many VARs developing security practices without the right level of knowledge and certifications?

MEDEIROS: That all gets to your certifications, your selling qualifications and your customer satisfaction index. If we can start to measure those things, you can weed out the riffraff real quickly.

One of the reasons there's a problem here is that most companies treat certification as a profit center. I treat certification as mandatory to get to the right level of customer satisfaction. It's a completely different mindset. Why wouldn't I want the majority of the people selling SonicWall to be certified? Yes, there's a cost associated with me doing it, but the value comes from customer satisfaction. Other companies treat this as a profit center and expect to make literally thousands and thousands of dollars on repeatable training exercises. But now a lot of people can't even afford the certification program for Cisco. So instead of sending the five people that they sent initially, they're only sending one person to get recertified and they keep the shingle up front. That's the reason why some of our programs are going to probably start to morph and change over time where you'll get more discount from SonicWall if your customer satisfaction index is high versus me saying: Yes, you sold a lot of boxes so therefore you get this discount.

CRN: Given all the vendors focused on security, are we looking at another bubble similar to the Internet bubble that burst in 2000?

MEDEIROS: I don't think that security will go away. What's so interesting about this business is just about when we think we've gotten the thing cracked, somebody comes in and tells us that whatever code they just wrote they can write around it, and I think that the threats will continue. But the industry will go through some level of consolidation. And standards are starting to become a pretty important part of that equation. How do you differentiate yourself if in fact you've got standards?

CRN: So at the end of the day, why should VARs want to partner with SonicWall?

MEDEIROS: Because SonicWall realizes that the channel can create a tremendous amount of value well beyond just security. As part of that, we think it's very important that we move up the stack so the layered security concept today is highly important to SonicWall. What's next is more types of layered security that we can bring to the gateway. Longer term, we can start to see the aspects of video, voice, data, personal information [and] company information that need to be maintained and managed in a very seamless way.