Data-encryption vendor PGP will plough a significant amount of its recent multimillion-dollar cash injection into its global channel partners, according to chief executive Phil Dunkelberger.
The firm recently secured $27.3m in Series C funding ), attracting two new investors to its backer list: Intel Capital, the venture capital arm of Intel, and D. E. Shaw Group. Existing investors DCM and Venrock also stumped up.
Speaking to CRN, Dunkelberger said: “We are expanding our channel programme all the time and we have done a series of events with our partners. The company started out in 2002 and has always been channel focused. This money will allow us to do more things for the channel; to invest in training and sales infrastructure and to add more channel partners to existing territories.”
He said 45 per cent of PGP’s revenue comes from outside the US and the firm has between 200 and 300 channel partners selling its products, but the vendor is keen to sign more.
“We want to open up new territories – we need to expand in developing areas in central Europe and the rest of the world, such as the Middle East and Africa. We have also just opened an office in Japan,” he said. “We recently finished a record quarter and the demand for services around our products is increasing. Partners are realising that they can make multiple sales using the same core asset and the same core training.”
Although all sales will be through the channel, he added, PGP plans to operate a direct-touch strategy to help drive more business. The vendor is not only planning organic growth, but would not rule out strategic acquisitions to strengthen its product set.
“There are certain technology areas where it would be better to buy into something that already exists, rather than developing it from scratch. There are thousands of security companies that have been founded – firms with excellent technologies and ideas – that need the investment to survive,” he said.
PGP also intends to extend the management functionality within its flagship PGP Encryption Platform, allowing it to ‘transparently manage’ third-party devices and software from PGP, ISVs’ and end-users’ in-house applications.
Dunkelberger added that partner specialisation is also a key focus for PGP in 2007.
“We are keen to work with partners that focus on financial services such as healthcare and manufacturing. Even though we make horizontal solutions, the vertical nature of the channel can help us.”
In the UK at present, PGP operates a single-tier strategy, but in other territories it works with value-added distributors and VARs, he said.
Dunkelberger said the investment from Intel’s venture capital arm was a “significant development” for PGP and its channel. It recently signed a technology partnership with Intel to develop a range of data security offerings covering everything from full disk encryption to encrypted local and portable storage.
“Our partnership with Intel is going to be a new channel opportunity for us that really opens up the whole system builder channel. Those partners that are building systems using Centrino chips are working with us and other vendors to build a whole suite of security software around those chips. It is a whole new market for us and our partners, and one we are very excited about,” he said.
Nick Garlick, managing director of VAR Nebulas Security, said PGP was a key partner for his firm.
“We are fortunate in dealing with PGP because it has a strong brand in the market. Its enterprise solutions have elevated it and set it apart from everyone else. No one else can offer these solutions across the board and that is what our customers want. PGP has simplified the process from disk encryption to file encryption and made it transparent.”
Garlick said the firm’s pledge to invest in the channel is welcome.
“The data security market is a huge area for us and PGP is one of the most professional organisations we deal with in terms of the training and tools it supplies to us as channel partners.”
However, Clive Longbottom, service director at analyst Quocirca, said that PGP still has a lot of work to do to refresh its image.
“PGP is seen as a serious player, but it should rethink its name,” he said. “Pretty Good Privacy does not sound up to it any more and it does not say what it is about as a vendor. It needs to up the ante in what it says it does. Encryption is becoming easy to get hold of, but few firms see the need for it.
“PGP needs to hone its message as to what an organisation gains though using encryption technology, such as better capabilities to open up channels of communication, better security along value chains and so on, to help it grab future business prospects.”
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