The Untangled Gateway Platform was built around more than 30 open source projects, including SpamAssasin, ClamAV, and Snort, and competes with proprietary systems from SonicWall, Barracuda and WatchGuard, among others.
Untangle chief executive Bob Walters said its downloadable virtual appliance was geared toward 250 users or fewer, and was meant to work on one server. It won’t scale to, say, 700 users, but works just fine with 400, he said. You can do custom installations to get it to scale as much as you want, but it’s not an enterprise product, he said. Instead, Untangle’s first open-source software release is geared to either SMBs or remote offices.
The enterprise-scale version is slated for release in 2009, he said. While enterprises have now accepted open-source software as being on, at least, equal footing with proprietary systems, open source is new to the SMB market.
Then why open source? It’s just not done in this market, Walters said. Open source will reduce costs. Currently, SMBs buy proprietary boxes from SonicWall and the other vendors, even Cisco, he said. Or they buy a desktop-only gateway product from security vendors such as Symantec or McAfee.
Walters said the appliance vendors have won market share by playing on fears of SMBs that software is difficult to install and manage. Everybody out there, including 95% of enterprise solutions come on boxes. They’re thrown away when you outgrow them or they become too slow…we run as software.
Untangle does sell its wares on boxes as a convenience, Walters said. It sells the hardware at cost and makes no margin on them, he said. We’re really a software company and to some extent an internet company. We think that’s the future of the market.
He also said virtualization is one of the factors that will drive the world back to software. By year’s end, Untangle’s platform will be able to run on VMware and other machines, Walters said.
There is a smattering of other companies that do sell unified threat management as software also, notably Astaro, based in Germany. Ninety five percent of Astaro’s solution is hardware, Walters said.
Untangle currently comes into versions: one free and supported by the online community only, which Untangle does participate in; and a paid version that offers 12-hours-a-day, five-days-a-week live support and after-hours email support. An around-the-clock live support service is expected to be operational within 60 days, once the personnel are hired.
The free version includes a spam, virus, spyware, phish and attack blockers, as well as a web filter, protocol control, open VPN, intrusion prevention, firewall, router and reports. As Walters said, The basic network security is kind of passe now, except for extremely large installations. Most of the action is in protecting email content from various types of malicious activity and protecting networks from the bad browsing habits of employees, for example, Walters said.
The paid version of Untangle includes active directory integration and advanced policy management, as well as remote access portal and configuration back-up.
Pricing for up to 10 users is $25 a month, and it’s double for up to 50 users. From 51 to 150 users it will cost $150 a month, and for more than 151 users $250 a month. Walters said it works out to about $2 per user per month for smaller companies, at the expensive end, and about $1 per user per month for larger outfits. He said it was between 40% and 60% cheaper than a comparable SonicWall installation. The professional package is meant to be targeted at or larger and more sophisticated channel partners, he said.
To buy an Untangle server with the software pre-installed costs $995 or $1,195. But Walters pointed out companies can pick up Cisco servers, on sale, for about $300 and install the software themselves if they choose. The Untangle Gateway Platform can be downloaded, installed, and configured in less than one hour.
Walters said VoIP, remote capabilities and other applications will be added either by the company or the open-source community. It was built with that in mind, he said of the platform. The best way to get a standard is to put it out there. We are seeking that widespread standard here.
Untangle has been selling a proprietary version of its software for the past several years, entirely through its channel partners. Walters said the company would continue to sell through the channel now that it is open source.
Since it founded in 2003, San Mateo, California-based Untangle has sold its proprietary software to hundreds of SMB customers. Walters said this was partly to prove to venture capitalists, at their request, that there was a market for software-based unified threat management. The company’s staff of four engineers didn’t have the sales acumen to sell much of it, Walters said. But it saw enough traction that about a year ago it landed $10.5m in its first round of VC, and Walters was hired.
The company rebranded as Untangle last December. Until that point, it was a 100% hardware vendor, like its appliance rivals today. But since it came out with its first proprietary software, in the past six months, it has tripled its customers, Walters said. During that time, it did not charge customers with 10 or fewer employees. Now we’re entering the next phase of maturing in becoming a true open-source company, Walters said.
Untangle, which currently has 25 employees, is targeting mid-2009 to be profitable, he said. In the fourth quarter of this year, it hopes to raise $12m in its second round of VC, which will take it to profitability, Walters said.
If its sales curve continues on its current incline, Untangle will be bought by a larger company next year, Walters said. Already, one of its rival appliance vendors has approached it, he said. If an appliance vendor doesn’t acquire Untangle, then a larger open-source company, potentially a public one, likely would, he said. That is, of course, if it continues to grow sales at a rapid pace.
In the meantime, Walters said the focus is on growth. Our internal mantra or rallying cry, which is how we’re building the company, is ‘Software is better, open-source software is best, he said.
