Techaisle Blog

Symnatec just announced its Endpoint Protection Small Business Edition 2013 which effectively moves Symantec's flagship security solution for SMBs to the cloud. The solution has an on-premise solution as well giving SMBs the flexibility to start with an on-premise solution or use directly a cloud-based solution with no additional hardware requirements and no special IT staff or training needed.

Techaisle Take
In the SMB space, the trend is definitely moving to the cloud, with SMBs reporting growth in the average number of cloud applications rising from 2 in 2010, to 4.3 last year and expected to hit over 7 this year. Symantec has seen flat revenue in a growing market and needs to take advantage of this trend in cloud services. Security is among the most widely deployed cloud application (~60% of Cloud Users).  Symantec has a very broad portfolio of products and despite a management shakeup and unwanted attention from hactivists; they have been able to maintain stability over the past few years. Having said that, there is always some uncertainty when migrating from one architecture to the next; it will be very important to maintain a solid opportunity for channel partners and they will have to execute well as they make this move.

Symantec needs to ensure that their channel partners are well trained in the difference between between the 2013 cloud edition and the 12.1 on-premise version to avoid any SMB marketplace confusion. Symantec also needs to make sure that their marketing campaigns present the choice of offers as a benefit rather than a hard decision; there are benefits to both cloud and on-premises versions depending on the SMB customer need. We have found that there is a gap in demand from channel partners for cloud security services based on what they are hearing from their SMB customers – Vertical Applications, Security and Storage and Backup solutions top the list of requested applications.

All software companies are wrestling with or implementing cloud services strategies. After Cloud Security, which is a strategic imperative for Symantec, the largest opportunities within Cloud Infrastructure are in Remote Storage & Backup services, unless they step far outside their core business. SMBs recently reported that although their business priorities have remained fairly constant, 77% want vendors to reduce complexity in IT so they can focus on business and customers. It seems Symantec wants to enable that by offering both (all) their services through a common interface which is delivered through the channel and allows remote management of both On-Premises installed base and Cloud versions. If they can do this successfully, it should be a win for both small businesses and channel partners.  Even so, the devil is in the detail, and if they fail to bring both of these to the market successfully they risk losing credibility in their core security market.

Anurag Agrawal

BROADENS RANGE OF OFFERINGS AND INCREASES NUMBER OF SMB CHANNEL PARTNERS

On March 13th, 2012, Dell announced the acquisition of SonicWALL, a leader in Unified Threat Management (UTM), further broadening its portfolio of security offerings, especially for SMBs and branch offices. By acquiring SonicWALL, Dell gains on multiple fronts.

• Broaden its Portfolio of Products and Services for SMBs. While SonicWALL has added enterprise-level offerings in recent years, for a long time it was known primarily as SMB-focused company and one of the leaders in UTM for SMBs. Known primarily for its security appliances, it offers SMBs gateway security to protect their networks as well as web and email security, secure remote access and continuous data protection (secured at remote locations). Most of these offerings would supplement Dell’s existing products and enable SMBs to purchase more of their products from a single source.

• Expand its Channel Partner Base. SonicWALL sold almost all of its products through a loyal base of channel partners, who benefitted not only by selling SonicWALL appliances but also earning ongoing service revenues from managing those appliances as well as off-site continuous data protection (CDP). In that respect, SonicWALL was a step ahead of the industry in offering remote services and would fit in well with Dell’s cloud ambitions. While there may be some overlap between the channel partners of the two companies, and Dell may not grandfather all of SonicWALL’s partners to resell Dell products, Dell would still significantly increase the number of its channel partners (including many MSPs) and broaden its footprint in the SMB market.

• Enter a Fast Growing and More Profitable Area. SonicWALL accounts for less than one-half of one percent of Dell’s revenues but it is growing much faster. While Dell’s revenues, including revenues from various acquisitions, have essentially remained stagnant over the last five years, SonicWALL has grown by almost 30% during the same period. Its net profitability is 2-3 times higher than Dell. By selling SonicWALL’s products to its current customer base, both directly, through Dell Services and through Dell’s PartnerDirect members, this profitability will increase further as selling through Dell will help reduce SonicWALL’s sales and marketing expenses (which account for 35-40% of its total revenues)

Dell has acquired several companies in recent years that had developed products primarily for SMB customers. After acquiring them, Dell has not only increased their sales to SMBs but, in many cases, also sold those products to branches of its large customers. If Dell follows the same strategy for SonicWALL’s offerings, its latest acquisition will be a win-win situation for Dell, SonicWALL, their customers and Dell’s investors.
Anil Miglani