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Exclusive: WatchGuard hunting security acquisitions

Application-aware and intrusion prevention technologies top of wish-list

By Jason Stamper

Unified threat management (UTM) appliance maven WatchGuard is on the look out for acquisitions in adjacent areas of the security market, CBR has learned, with application-aware security technology and intrusion prevention possible candidates.

WatchGuard is focused on perimeter security, its main revenue driver being its UTM appliances which sit at a company’s network gateway to stop malware and other attacks. Founded in 1996 and subsequently taken public, the firm made a good start but lost direction somewhat and struggled with losses. It was subsequently taken private again when it was bought by Francisco Partners and Vector Capital in October 2006.

With those equity houses having many billions of dollars under management, there’s plenty of scope for expansion, and expansion is exactly what is on the cards, the firm’s CEO Joe Wang told CBR in an interview.

"M&A is definitely strategic direction for us," Wang said, "so we continue to look around the world to look at the best technologies, to look at the technologies that we want to own, and also businesses that would augment ours and allow us to grow faster. We’re fairly strong financially and both private equity firms have multi-billion dollars under their management and they like our management team, they like me. They want to use this as a platform where they could invest more into and to grow the business."

Joe Wang

He added: "With that support and with our desire to be the best gateway security appliance vendor in the world, you’re going to continue to see us buy, license and OEM. We’ll use all these ways of getting new products and new business."

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It’s hardly surprising that the equity investors have confidence in Wang’s ability. He claims that the last three years have been the best in the company’s history from a revenue point of view, and that it has seen strong growth every quarter. Also, in a previous life as CEO of LANDesk Software he grew revenue 150% in four years and successfully sold the firm for over $400m, handing good profits back to investors. As he put it, "Investors tend to like it when you make them money."

So which areas might the firm invest in? "We don’t have any intention to offer solutions for end-node security," Wang said, "But in the [perimeter security] category, the category we are in, there are many interesting areas and quite a few of them that we’re not in yet. For example, in addition to the current network and content security, we introduced the SSL VPN product, but it’s a separate product that we have [i.e. it’s not been made part of one of its Unified Threat Management boxes]."

"We also licensed a 3G product, right, so it’s for a wireless service," Wang continued. "So there are quite a few of these adjacent areas that we can go in, and we are looking. We have not decided what we’ll license or buy yet, depending on the opportunity."

Asked whether Wide Area Network (WAN) optimisation might be too far from WatchGuard’s core product set today to make an acquisition in that space make sense, Wang said: "It is within the realm of possibilities. It’s not very high on our list. I don’t want to disclose too much, but the area that we are more closely looking at is to significantly enhance intrusion prevention and application-aware security. So that’s one area that’s a little different than the traditional firewall, but that’s one area we’re more closely looking at."

While WatchGuard already has some application-aware security technology and also some intrusion detection/prevention technologies within its UTM range, it’s clear the firm may be prepared to buy a specialist even if it is a technology that sits alongside its UTM appliances. For example last year it bought Borderware for email and web content inspection and data loss prevention, and Wang told us the firm has no plans to integrate that technology into its UTM appliances.



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