Jerry Ungerman is president of Check Point Software, a $525 million maker of security software with headquarters in Ramat-Gan, Israel, and Redwood City, Calif. Having in just a few years grown from a start-up to become the dominant vendor of firewall software in the enterprise, Check Point Software now is seeking new markets, principally mobile computing and small business customers.
A 30-year industry veteran, Ungerman previously held various positions at Hitachi Data Systems and IBM. Ungerman outlined Check Points strategy in an interview with eWEEK Executive Editor Stan Gibson.
EWEEK: Why move from the lucrative and stable enterprise market into the mobile and SOHO markets?
Ungerman: Were moving from the enterprise to the small business market and to the broadband and consumer market as well as the wireless market. Were going everywhere with our technology.
The enterprises and corporations of the world are going to let their employees call in on phones and PDAs as well as work from home. The largest corporations in the world have standardized on Check Point technology, and there are a lot of businesses that have thousands of remote offices including people working at home.
In the wireless world, IBM, Microsoft and Nokia will imbed our technology in their devices.
EWEEK: But the home user with broadband is also a target?
Ungerman: Sure. We offer the S-box, a $300 device for small offices and home offices. Also, our technology is being embedded in DSL modems and cable modems. It just has to be activated by the service provider.
EWEEK: Check Point has had gloriously high profit margins. Wont moving to these markets where price tags are smaller threaten your historically high margins?
: Interview With Jerry Ungerman”>
Ungerman: We dont see them deteriorating. Its still a software business model with our traditional high margins. We are seeing some very significant orders, in the thousands and the tens of thousands [of users] right now. But we will have the same profit as a percent of price as before. And well also have higher volumes, so it will be very consistent from a financial aspect to our traditional business.
EWEEK: Some of your high profitability is due to Israeli tax laws, isnt it? Briefly, how does that work?
Ungerman: We do have a lower tax rate. Its just approved enterprise status. They give tax breaks to companies that are growing and developing. Its very pro-business. We have had a favorable tax rate and well continue to have it for an indefinite period of time.
EWEEK: How will Web services impact Check Point? Are you going to try to promote security standards for Web services?
Ungerman: We will be involved [in security standards] through our OPSEC initiative and through partners. And we will be bringing technology ourselves to the market. Youll see announcements from us this year that Im not prepared to discuss today in this area. There is a lot that we can do and will do.
OPSEC is of course an open platform for security. It consists of 20 APIs that allow others to integrate with Check Points firewall technology. For example, using the OPSEC APIs, content filtering and intrusion detection can be added.
EWEEK: Are you paying attention to the Web services initiatives of Sun, Microsoft and IBM, and are you focusing on one of them, say, Microsoft.Net, more than others?
Ungerman: No, we do them all. We really are horizontal in what we do. Weve always been open: we run on all platforms, all operating systems and all environments. You really do have to be heterogeneous. Its one of the things weve done successfully. It makes sense for us as an independent company because our customers can use multiple vendors and multiple protocols and have an entire network be secure.
Web Services are very interesting for us. There are many demands for us to take our level of security and put it in a Web services environment. Were doing more in single sign-on. And were partnering with Netegrity and Oracle, for example. But we try to work with all competing Web services providers.
: Interview With Jerry Ungerman”>
EWEEK: What are you working on for upcoming releases?
Ungerman: We are redefining firewall technology in almost every announcement. For example, SmartDefense was a major step forward that includes technology to help people fight different attacks like Nimda and Code Red in real time. No other firewall/VPN technology had done that before. Youre going to see other announcements like that.
Well add a lot more management capability. Were going to make management capabilities a reality for extranets, for example. When you let in partners and suppliers, its a very difficult and challenging environment because youre trying to tie together multiple untrusted networks. Weve brought out the initial capability in Provider-1, and we are going to expand that to allow them to manage an extranet environment from a single console and turn all these untrusted networks into a trusted connection between everybody.
We have the basis in there now, but this is going to be really expanded. It will be more robust for use across a larger number of partners and suppliers. It will be much more automated and more secure.
It will allow you to make changes. When you make a change, everybody has to be notified. Were going to automate a lot of that stuff. It will be much easier to do, rather than make phone calls and send e-mail messages. It will be a very sophisticated product.
EWEEK: Which vertical markets are the hottest for you right now?
Ungerman: Financial services and insurance are the two largest. But were in all business and manufacturing sectors; some are larger than others. Anybody who uses the Internet needs to use our technology.
EWEEK: You recently introduced a product for VOIP. How big do you see the market for VOIP security?
Ungerman: The market for VOIP security will be big if VOIP is big, but thats unknown. I think its a few years late right now. It hasnt become what a lot of people expected it would be.
EWEEK: Does Check Point have an acquisition strategy?
Ungerman: We continually look and evaluate. We have a lot of cash – in excess of a billion dollars. So were always being approached as well as looking at possible acquisitions of technologies or companies
EWEEK: You had a very high growth rate for a while, and then it plateaued. Do you see returning to a high growth rate again?
Ungerman: Yeah, once the economy improves. This is a macroeconomic issue and an IT spending issue. The market and opportunity for our products will have a high growth rate in the future, but we have to get through the current economic environment.