Wall Street seeks details on Check Point analysis
30.10.2006
The financial world today learned firsthand from a prominent network security expert how he believes Check Point should proceed if it wants to dominate other security vendors, including the major networking vendors that also sell security gear.
UBS, an investment bank that researches technology companies, pulled together a conference call today to question Richard Stiennon, founder of ITHarvest and author of an open "wakeup call" letter to Check Point founder Gil Shwed suggesting ways Check Point can lead in delivering security gear rather than follow.
The letter was published last week in Network World. Check Point says it has no plan to respond to Stiennon in a public forum.
Check Point needs to buy a hardware vendor - Stiennon named Crossbeam as the best possibility - that has flexible, high-performance gear tuned for security that can run Check Point's range of software. That way customers can choose just the products they want and Check Point can provide a single security device that addresses essential threats, according to comments Stiennon made during the UBS session.
The company's software products are already well respected and it needs hardware of its own to augment them, Stiennon says. "Check Point is an excellent brand not sullied from a security standpoint," he says.
Check Point does license its software to hardware vendors, principally Nokia, that sell it on security appliances, but making its own hardware could drive prices down, making the gear more attractive, according to Stiennon. "At the least the administrative overhead for two companies would be eliminated," he says.
UBS's Dino Diana, director of the firm's security and infrastructure software research, says he agrees with Stiennon's assessment that Check Point should move its headquarters to the United States if only to avoid problems with possible mergers and acquisitions. Check Point's attempt to buy intrusion-prevention vendor Sourcefire was scrapped after the U.S. government investigated whether the deal should go through. The government worried that a company based outside the United States would control a company that helps secure key government agencies including the Department of Defense.
Stiennon says the attempt to buy Sourcefire was symptomatic of Check Point's problem of following trends in security rather than leading them. The company was trying to glom on to technology that warns about threats that somehow make their way onto corporate networks. "That's the opposite of what firewalls are all about," Stiennon says. "If the firewall is doing its job right, there wouldn't be any alert to track in the backend."
He says he doubts Check Point will be bought because Shwed owns a major piece of the company and shows no signs he wants to give up control.
Stiennon says an additional reason to shift headquarters to Silicon Valley would be to force the company's executives into the environment where the next security advances are being made. That way the company won't discover a trend too late to lead it, he says. "[Shwed ]isn't having breakfast in the diners where everybody else is eating breakfast," Stiennon says.
Diana didn't seem optimistic that the company would move. "Let's see if they heed that advice. Not likely," he says.
Check Point is missing out on the opportunity presented by the clamor for network access control (NAC) by failing to develop network hardware such as devices made by Vernier that controls access and stops bad behavior, Stiennon says.
Check Point needs to act soon to adjust its portfolio because a spike in firewall renewals is coming. Customers who bought Check Point firewalls three years ago will be looking to refresh them, which represents an opportunity for competitors such as Juniper to grab some of Check Point's business, Stiennon says.
He notes that big corporations with hundreds of firewalls deployed relied on Check Point because it was the firewall vendor that could manage that volume of firewalls centrally, but Juniper has won some of those accounts. "If they don't do something in the next few quarters, they will miss a big upgrade opportunity," he says.
Check Point needs to develop its software and pricing to make its products affordable and scalable for carriers to provide virtualized security services within their networks, he says.
Asked whether Check Point had reacted to the open letter, Stiennon says the company has acknowledged reading it, but has not commented on its content.
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