Joe Wang is the recently appointed Chief Executive and President of security appliance maker Watchguard. He spoke to Patrick Gray by phone from Singapore about Unified Threat Management and the small to medium enterprise.
Patrick Gray (PG): Firewalls have become somewhat of a commodity item. There was a lot of very good money around in the 90s selling them, but how has the market changed and how can Watchguard ensure that it's still in the game and still able to grow?
Joe Wang (JW): Well it is a mature market but there are still a lot of differences. For example, Watchguard is known for its proxy technology which many firewall companies do not provide.
PG: With India and China developing so much IT based infrastructure that those two markets would present possibly the best options for a company like Watchguard to pursue growth. Is that correct?
JW: Well it is somewhat true. Watchguard growth is mostly coming from the UTM market and today the UTM market is growing at over forty percent per year which is a very rapidly growing market. We are seeing a lot of growth there. That said, the firewall products are still selling quite well and clearly in the Asia Pacific market it is growing very rapidly because this market is more mature in the US and Europe. So we do see the growth in Asia Pacific and specifically as you mentioned, the China and India markets are good markets for us and we are expecting good growth.
PG: I am sure you will disagree with this, but Watchguard is essentially a commodity provider. You are providing security appliances mostly to the small to medium enterprise. How do you differentiate yourself?
JW: Yes, it is a commodity market if you look at the firewall market being a mature market. Like I said, even in that mature market we do have differentiators such as the proxy technology. But beyond that, I do not believe that a UTM market is a commodity market. We're one of the few vendors that actually provide us complete suite of UTM capabilities and integrate all these technologies into one appliance and make it easy for the customer to use and most importantly make it reliable. That's not an easy task and that's where Watchguard shines. If you look over the years, especially in the last several years, why customers continue to buy Watchguard products, it is about reliability and it is about ease of use and about a complete set of UTM functions and those are the things that we do better than our competition and we will continue to do the best.
PG: So I would imagine you would be getting your most fierce competition from organisations like Symantec, Checkpoint, perhaps even Juniper?
JW: Well we don't see competition from Symantec because they have decided to get out of the appliance business. I don't know if you are aware of it. For a few years they were in the appliance business and now they have officially exited the market in the last year. We do see some competition from Juniper and Checkpoint but our position and their market positions are a little different and as a result we are more focused on the small and medium sized enterprises instead of the "hundred thousand nodes" types of higher end enterprise customers.
PG: That actually leads me to my next question which is why hasn't Watchguard actually made a play for the enterprise market? That's where the biggest dollars are. Is because you've found yourself in a market segment that you are quite comfortable playing in?
JW: We have purposefully decided to focus our technology and marketing on the small to medium sized businesses. Let me clarify the definition of that. When we say SME in the US we actually mean a small company with twenty employees to a medium company with up to five thousand employees. Here in Singapore when I talk about a five thousand employees company that is actually a large company.
PG: It's the same in Australia.
JW: Correct. I just want to clarify that. Our span of technology is actually quite broad. Now having said that and clearly we do understand the enterprise market and the dollars that the large enterprises have in terms of an IT budget but as you understand there are so many medium sized companies and we are obviously a leading player there. The technology we provide will be tailored to that market so that everything is in one box and it's easy to use and easy to manage. You have to provide different flavours of product and that's where we specialise and that's where we do better.
PG: Do you think the small to medium enterprise market is under serviced by the security industry?
JW: I wouldn't say it's under serviced because companies like Watchguard play there quite well and I think they are served quite well by companies like us. I think the higher end of the market is probably more competitive because of the companies like Juniper, Checkpoint and Cisco who are all focused on that.
PG: I seem to recall when Juniper acquired NetScreen and did a big push into the enterprise market -- which for them was actually a step down because they had been doing carrier grade prior to that. I don't think they really enjoyed the success that they had envisaged. Do you agree?
JW: I think the high-end market always is crowded with a lot of players and to be honest it is a good market as well. Our strategy is to target the small to medium sized businesses and it has proven us well in the past and we believe the market is growing quite rapidly there and should be able to serve us well.
PG: So who do you actually encounter most competition from in the particular market that you compete in?
JW: Sonic Wall is a company that we see from time to time competing in a similar market. But the market is definitely less crowded.
If you look at it from the market perspective, the UTM market like I said has been growing very rapidly and we see that continue to happen especially in the SME Market. When you think about companies that they need not only a firewall, but they need a spam blocker, a web blocker, the gateway AV. One box that has got everything in it with good price, easy to manage and just put the box between your network and the outside Internet and you are set. It's a very strong proposition and that's where we see substantial growth for many years to come.
PG: Well that's something quite different from just a few years ago isn't it? UTM required a team of monkeys working around the clock to maintain all that stuff whereas now we are getting to the point of "set and forget" security. Not that it's going to be foolproof, but you can certainly get a much higher level of security out of one device than you could have five years ago.
JW: That's right on. In fact when you look at the history of the market the people in the larger companies tended to have more concerns about it and the solution was to have different vendors providing different functions and to serve the large enterprise. Then a few years ago companies started to go into the market by combining all these capabilities and making it easy to use and combining everything into one box. That's when the small to medium sized businesses started to be able to take advantage of these types of technologies and to fully protect them from all kinds of threats.
That's where the word UTM came from and that's where we have seen substantial growth in the last several years -- the ability to bring everything into one box; to provide an easy solution for the small to medium sized businesses. It just makes good business sense.
PG: What's the experience been like for Watchguard operating in the Australian market over the last five years?
JW: Well in the Australian market as you know, Watchguard as a company has gone through some changes specifically last year coming from a public company being taken private by the private equity firms and the change of management team. I would admit that there were some management changes and that happened in Australia as well.
But now we have a very strong team in place in Australia. The good news for us is even with the management team changes, we have not suffered in our business. Yes we have not seen substantial growth in Australia but the business has been very stable there and we now have a strong team in place and we are expecting very high growth... we are expecting continued and renewed investment in the Australia market and we are actually very bullish about that market.
This is an edited transcript of an interview that originally ran in ITRadio.com.au's Risky Business podcast. Transcript by Danie Smallwood. You can hear this interview by clicking here.