Blue Coat hangs its hopes on cloud service
Security vendor makes up for disappointing growth in 2010 with new products and its very first cloud service
After enduring a mediocre 2010, Blue Coat is looking to re-ignite its top line with a refreshed product line-up that includes its first-ever cloud service.
The web-content security and WAN optimisation vendor struggled to match the growth of its peers last year, with sales inching up one per cent year on year in its most recent quarter to 31 October. Chief executive Michael Borman admitted revenue growth was "lower than what we are capable of delivering". EMEA is acknowledged to have been a weak spot.
Blue Coat's perceived lack of innovation and over-reliance on direct-touch sales, as well as the departure of several high-profile regional executives, have added to partners' frustrations. Several are known to have diluted their focus in recent months.
In November, Borman emphasised that there were a number of new products in the pipeline, "which should help maximise the company's growth potential".
Since then, the traditionally enterprise-focused outfit has launched its first dedicated SMB appliance, ProxyOne, which is aimed at firms with 100 to 2,000 users.
But it is also pinning its hopes on its Cloud Service - which has been 18 months in development - to breathe new life into its top line by extending its reach into even smaller end users.
Through the accompanying Cloud Partner Programme, partners can either resell or white-label the service, which uses the WebPulse cloud technology that has sat behind Blue Coat's appliances for six years.
Nigel Hawthorn, EMEA marketing vice president at Blue Coat (pictured), said: "Going back a year, our minimum price was £10,000 and you needed to buy 10 part numbers to get two different devices with two manuals.
"ProxyOne is one device for £5,000 and now our Cloud Service means you can just give the customer a URL, they log on and test it and then pay a small fee per user. It takes us to a different place than where we were a year ago, so let battle commence," he added.
Niall McGrane, general manager at Westcon Security - one of three UK Blue Coat distributors alongside Arrow ECS and Computerlinks - said it is no secret that the vendor struggled in EMEA last year.
"Blue Coat has a lot of heritage to build on, but if you do not keep moving forward, you lose pace and that is what it is now starting to address with the new products and messaging," he said.
Partners have expressed concerns that Blue Coat's relatively late entry into the cloud arena has seen it lose ground to the likes of Scansafe and Webroot.
However, Hawthorn argued that Blue Coat had learned from its competitors' mistakes.
"It allowed us to work out what people need and develop the right product for them," he said.
"Some competitors' cloud services and appliance software have been designed by different people at different times. Customers do not want two management systems and two sets of policies. WebPulse drives our appliance as well as the new Cloud Service."
Hawthorn added that the Cloud Service would help Blue Coat and its channel gain traction among two end-user types, the first being its core base of large, distributed end users.
"Our traditional large customers are increasingly saying they either have travelling users or users in smaller offices where they cannot justify installing an appliance," he explained.
SMBs with fewer than 100 heads are forming a second core target for the service.
"ProxyOne is fine if you have 100 users, but what if you have 50 or 25 users? Smaller organisations have three levels of security: firewall, anti-virus and hope," said Hawthorn.
"If their trusted reseller or broadband service provider says to them ‘how about paying £2 per user per month to give you web security?', this is a big low-hanging fruit for channel partners."
Clive Longbottom, analyst at Quocirca, said the success of Blue Coat's cloud strategy would swing on its messaging.
"It is something that is really needed, but the problem is the messaging," he said. "Blue Coat tends to focus on information-security messaging speak, and once you get into firms with no dedicated IT department, that means nothing. It has to be more about what it means to their business."
Etienne Greeff, director of Websense partner SecureData, said: "Blue Coat is an important part of any enterprise reseller's portfolio, and will continue to be so. It is doing the right things to position itself for future growth in important matters such as cloud and branch office."