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SCMP Reporter

WatchGuard Technologies, which pioneered Internet security appliances for small businesses, has to play catch-up with rivals in Greater China and spark a price war if needed.

President and chief executive James Cady said: 'We've been hearing a number of vendors make a lot of noise in this market, but we feel pretty good about competing here in terms of both price and performance.'

He noted WatchGuard planned to make rapid market share gains over the next 24 months.

It was trying to make up for lost time since, apart from Japan, it had failed to establish a strategic marketing programme in key Asia-Pacific markets for several quarters.

Seattle-based WatchGuard cannot afford to ignore the competition, which includes Cisco Systems, Nokia Internet Communications, SonicWall, NetScreen Technologies, Rainbow Technologies, RSA Security, Symantec and Check Point Technologies.

'We believe our improved execution in sales and marketing, our sustained investment in world-class technology and the successful roll-out of new products which address a broader market have created a powerful foundation for long-term growth. In coming quarters, we expect to see continued revenue growth and improved financial performance in Asia and the world,' Mr Cady said.

Despite sluggish information technology spending worldwide, WatchGuard posted US$33.1 million in first-half net revenue.

About 15 per cent of its global revenue is credited to a strong Japan market.

Nasdaq-listed WatchGuard develops user-authentication and data-encryption software as well as Internet firewall hardware for virtual private networks (VPNs) used mainly by small and medium-size enterprises (SMEs).

Its flagship hardware product, Firebox, was the industry's first plug-and-play Internet security appliance. Software products ServerLock and AppLock/Web offer server computer content and application security to protect critical data and services against unauthorised or unintentional access or manipulation.

With partners such as AT&T and Deutsche Telekom, the company also provides subscription-based managed Internet security services - called LiveSecurity - to both enterprise customers and home computer users.

'We are very excited about our recently launched technology offerings that will allow us to extend our reach to large enterprises across Greater China and the world's top 1,000 companies,' Mr Cady said.

WatchGuard's new RapidStream line aims at multinational corporations using Check Point's Internet firewall to protect networks.

In April the company paid US$48 million for RapidStream, a Silicon Valley-based manufacturer of high-performance firewall and VPN appliances.

Mr Cady claims RapidStream's line offers 12 times the performance of more established products sold by the likes of Cisco and Nokia.

Meanwhile, the new Firebox V-class appliance makes WatchGuard competitive at securing large domestic enterprises with distributed networks.

International Data Corp vice-president of Internet infrastructure and security software research Chris Christiansen said WatchGuard innovated with security appliance for SMEs in 1997 with the Firebox 'and it continues to dominate the No 1 spot while expanding into other fast-growing areas of the appliance market'.

Mr Cady projected WatchGuard's main rivals on the mainland, Hong Kong and Taiwan were Cisco and NetScreen for the large, carrier-class projects and Nokia for the SMEs.

'But I see a higher-growth potential for us because our main thrust is in the market's sweet spot - the US$1,000 to US$5,000 firewall appliance price segment,' he said.

'I'm also no stranger to competing on price in Asia.'

Before he joined WatchGuard, Mr Cady served as president of Sonicblue's Rio division of MP3 players. He is noted for his role in building Rio to a position of market leadership, reaching millions of customers worldwide.

'I competed aggressively against Chinese manufacturers and major players such as Panasonic and Sony, and still kept the Rio ahead,' he said.

WatchGuard is also keen to extend its LiveSecurity service to Greater China. It already has a similar operation in Japan and plans to set up another in South Korea.



WatchGuard vows price war