WatchGuard Bulks Up

WatchGuard Technologies Inc. (Nasdaq: WGRD) is trying to move up in the security world. The company, which has been providing security solutions to small and mid-sized enterprises, today announced a new suite of security products it claims put it in the gigabit firewall market (see WatchGuard Intros Security Suite).

The Firebox Vclass line includes the V100, a box that comes with two Gigabit Ethernet and two high-availability ports, has 600 Mbit/s firewall throughput, and can support as many as 20,000 IPSec VPN (Virtual Private Network) tunnels.

Observers say much of the upgrade stems from the recent acquisition of RapidStream Inc. (see WatchGuard Takes RapidStream). WatchGuard completed the acquisition of the privately owned maker of ASIC-based firewall and VPN appliances earlier this month, gaining a high-quality hardware platform that was already competing in the gigabit firewall market.

Before today’s announcement, WatchGuard had its main market share in the small to mid-sized enterprise range, according to Mark Stevens, WatchGuard’s vice president of network security.

“The $1,500 to $5,000 range is a sweet spot,” he says.

The company’s main competition on the low end has traditionally been SonicWall Inc. (Nasdaq: SNWL), as well as Cisco Systems Inc. (Nasdaq: CSCO) and Check Point/Nokia’s small enterprise products.

Now, the Vclass line means WatchGuard will be marketing to service providers, and it puts the company in head-to-head competition with high-end players like NetScreen Technologies Inc. (Nasdaq: NSCN).

The company's also got some new gear for smaller enterprises, a range of products including the V10, V60, and V80, which range in speed from 20 Mbit/s to 270 Mbit/s and can support from 10 to 8,000 VPN tunnels.

“This is really completing their vision,” says Matthew Kovar, an analyst with Yankee Group. “Their acquisition of RapidStream moves them out of the small-medium-sized offices all the way to carrier grade.”

Kovar says that the depth and breadth of the new WatchGuard platform is quite unique. “Even Cisco is still challenged to produce [as broad a platform],” he says. “Now WatchGuard is most certainly a threat to companies like NetScreen.”

In a strange twist of events, the acquisition of RapidStream has led WatchGuard to enter into a partnership with one of its main competitors. Only weeks before the acquisition process began in early February, RapidStream signed a deal with Check Point Software Technologies Ltd. (Nasdaq: CHKP), which, through its Nokia Corp. (NYSE: NOK) partnership, is already one of the major players in the high-speed firewall market (see RapidStream Releases Security Package). But the acquisition of RapidStream allowed WatchGuard to inherit the Check Point deal. WatchGuard announced last week that the existing RapidStream family of products would still integrate Check Point software (see WatchGuard, Check Point Partner).

“We will be maintaining the relationship with Check Point,” Stevens says, adding that WatchGuard will continue to develop RapidStream’s line of products.

WatchGuard claims that about 80 service providers globally, including AT&T Corp. (NYSE: T), Deutsche Telekom AG (NYSE: DT), and Japan Telecom, are already using its products. It will not reveal which or how many customers it has lined up for its new Vclass products. The products, which range from about $600 for the V10 to approximately $25,000 for the V100, are set to ship sometime this quarter.

— Eugénie Larson, Reporter, Light Reading
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