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Security's Comeback Player: Network Associates' George Samenuk

Quick: Name a former IBM executive enjoying success in software security. George Samenuk, chairman and CEO of Network Associates, probably doesn't come to mind as readily as John Thompson, the dapper Symantec CEO.

But Samenuk's company is making news. Sales, 80 percent of which now go through partners, were up 13 percent in Q3. And has been recombined into Network Associates. Moreover, the company's Top 100 partners have grown their security businesses each quarter in 2002.

But what a road to recovery! Since taking over in January 2001, Samenuk has restated financials, endured SEC scrutiny and addressed partner discontent. Here he explains how he's sorting out all those issues.

VB: You're making an effort to get in front of partners. Winning fans?
Samenuk: When I joined, partners said 'Look, we love your products; you've just abandoned us. You've delivered on none of your promises.' That's when I hired Mike Menegay and started rebuilding.

VB: Made any progress?
Samenuk: In a word, yes. More work to do, though.

VB: Of all the segments to be in right now, security has to be one of the best. But why are so many companies struggling?
Samenuk: I can't speak for them. But customers in the U.S. and Canada have been telling me that attacks against their networks have doubled over last year and are now [occurring at a record pace. This is going to be a boom business for the next couple of years, at least. We're expecting double-digit growth for the IT security industry. We're expecting a recovery to happen next year.

VB: But why are so many sucking wind?
Samenuk: This has been my premise for a couple years now: There's only one or two survivors in every space...I'll submit to you that In every sector of IT, there will be one or two survivors. There's no room for seven PC-makers or seven firewall-makers,no room for eight antivirus [vendors, etc. The strong are dominating, and the weak are dying.

VB: So who are the two survivors in your space? You and Symantec CEO John Thompson?
Samenuk: Well, it's us and Symantec, no doubt. If you look at

market share, revenue growth and the cash of these companies, it's these two%85I think there are too many intrusion-detection players, too many firewall vendors, and too many companies that say they'll be a full-function, security vendor when it's just not going to happen.

VB: How can you catch Symantec?
Samenuk: Well, when John went to Symantec, [it didn't have the same problems Network Associates had. I came in with an SEC investigation, a restatement in May of this year, and a company with a $4 share price. So what I have had to do is rebuild customer, investor and employee confidence. And we're succeeding. Trouble is, he had a two-year head start on me in sales and marketing. Now, there's no analyst out there that says Symantec has better products than Network Associates'. So great technology will distinguish our company.

VB: What's your biggest issue now?
Samenuk: Getting in front of customers. They don't know the products well enough. But Sniffer, and Magic solve their problems. We just haven't shown up in customers' offices.

VB: How do you make the most of the opportunity without coming off as some Y2K zealot scaring people into buying your technology?
Samenuk: Just like insurance companies protect [your home, auto and life, we protect IT securities systems and we protect network reliability. I never have to explain what we do, whether it's right or wrong, etc. We provide a service that's necessary. And I really like that.

VB: What's your most important mission with partners?
Samenuk: Show up in the SMB market, and show up with Network Associates.

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