Webroot - Emerging vendor? Or something else?
Because I'm into that kind of thing, I usually start off the day by reading the press releases from security (and other IT) vendors. Usually, this stuff isn't very exciting (there's a lot of bluster and hot-air on the wire), but today I found an interesting one - or at least one that made me think.
This morning, Webroot
announced their addition to CRN magazine's
2006 Emerging Technology vendor list. Alright, that in and of itself is not that interesting - but what *is* interesting is reading between the lines to
speculate how Webroot is faring over all based on this announcement. As you know, Webroot is privately-held, so we don't get
the same kind of insight into their economics as we do with their publically-held
competitors. So any clue that we can get is a good one.
Now, before getting into this, I want to go on record as saying this is
entirely speculation and I am
not doing down Webroot;
I actually happen to like Webroot. In addition, I reserve the right to be
totally wrong, so this could all just be hot-air. However, if you'll
indulge me in a bit of speculation, this announcement does not appear to me as
if it bodes well for Webroot's long-term health. What? It's true - it looks
good on the surface, but even though the announcement sounds positive, I don't think it is.
Let's break it down, and I think you'll start to see why I say that:
Non-dominant market share: If you take a look at the criteria for
how CRN chooses emerging vendors, you'll notice that
market share is the number one most important criteria - but not in the way
you'd probably expect; to make this list, you have to not be the market leader in your space. More specifically, according to CRN, "
1. In established markets/product categories, the vendor could not be a dominant market-share player."
Last year. Webroot was
dominant in the spyware space; as a result, they would have been ineligible for inclusion in this
particular directory. So last year they had the market and now they don't?
Woah Nelly, that's not a good sign... particularly in an industry that tends to favor the market leader.
Direct vs. Channel Sales: Number four criteria for inclusion in the list is, "
4. The company had to demonstrate that its direct-sales mix was trending down, as evidenced by the company's revenue history." Now, we know that
Webroot's long term goal is to be 100% channel by 2007, so in-and-of-itself, this is not a warning sign. Where I think the warning sign is, however,
is
why they want to be 100% channel; more specifically, what does the
100% channel model imply about the makeup of the Webroot customer base? We know that channel sales
are a very effective
SMB sales tool, but
we also know that they're not as effective a tool for the large enterprise. Reading between the lines, I interpret Webroot's strategy as moving toward concentration in the SMB
while moving away from larger enterprises. Now, that's not to do down SMB - there's a market there to service for sure - but I had thought the Webroot direction was toward the larger enterprise.
The growth curve usually encompasses SMB first and then branching out to larger
and larger firms - the reverse, moving from larger to smaller, is usually a sign
of decline in the marketplace. Additionally, I'm wondering about the
investment they've already made. The large enterprise play is certainly
marketed by them and discussed by analysts - -
clearly they've invested heavily. If so, why are they backing off?
Comparison with other vendors: The complete list of other emerging security vendors at CRN is as follows: 8e6 Technologies, Application Security, Array Networks, BioPassword, Bit9, Bradford Networks, ConSentry Networks, FireEye , Lightspeed Systems, MX Logic, Network Management Group, Palisade Systems, Passlogix, Port Authority Technologies, Red Condor, Senforce Technologies, Solutionary, TrustELI.
Now, trust me, I am *not* about to do-down these other vendors... There are some great players in that list
and a number of firms that I watch closely and strongly support. However, what I would point out is the
discrepancy between the funding received by Webroot (for example, the
108 million dollar influx of last year) and the funding received by the other vendors on the list.
For example, Senforce and MXLogic (their peers according to CRN) received
12 million dollars
and
26 million
respectively... not the same ballpark. Recall Webroot's competition: Symantec, CA, McAfee, Trend, and Microsoft...
If it was me, I'd be pretty scared if two of the top five largest software companies in the world were my competitors,
and more scared to peered with firms with 1/10th my backing.
Now, I reserve the right to be totally wrong, and I certainly mean no disrespect
to folks over at Webroot. But I'm not sure this is good press for them; I
question why they would concentrate their marketing dollars here.
Yesterday, I probably would have speculated that Webroot's in good health.
Today, I'm not so sure.
Posted by Ed at November 14, 2006 07:34 AM
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