FireEye prepares channel for downstream assault

Anti-malware trailblazer to reward partners for targeting smaller firms with fewer than 2,000 employees

FireEye claims it is moving from a "category creator" to a "category consolidator" as it readies partners for a mid-market push.

The anti-malware vendor enjoyed a sizzling stock market debut last summer as investors scrambled to get in on the ground floor with a technology being talked up as the successor to traditional security defences such as anti-virus and firewalls.

So far, FireEye has earned its crust targeting the large enterprise and government accounts most susceptible to advanced persistent threats.

But it is now plotting a downstream channel push after witnessing "clear market demand" for its technology among firms with fewer than 2,000 employees, vice president of worldwide channel and alliance Steve Pataky told CRN.

The vendor is making market development funds available to partners for the first time to help them hunt and close business in this commercial enterprise space, Pataky said.

A new 25-strong inside sales team based in Cork has also been assembled over the past quarter to generate leads outside FireEye's traditional large enterprise stronghold, he added. This will be backed by new deal registration and enablement resources, as well as bundles tailored to smaller firms.

"We've traditionally been successful in large enterprise but to keep pace with the changing threat landscape we are moving downmarket," Pataky said.

"So many high-profile breaches we read about originate down the supply chain in smaller companies. So our belief is that this is becoming a significant problem for enterprises of all sizes."

Certain sub-segments of the mid-market are particularly susceptible, Pataky said, including smaller financial services firms, intellectual property-heavy technology firms and companies that support the oil and gas industry.

"There's clear market demand there," he said. "This is why we are pointing partners in that direction and as they're already the trusted advisers to these firms it's a perfect confluence."

In its IPO filing, FireEye claimed its virtual machine (VM)-based security platform will "supplement and eventually replace" the traditional signature-based security techniques that have dominated the industry for 20 years.

Pataky argued the vendor should now be regarded not only as a "category creator" in the space but also a "category consolidator" following its shock $1.05bn (£0.64bn) acquisition of Mandiant, whose full range of incident response services have now been made available to the channel.

This fits with FireEye's goal to "go deeper" with fewer partners, Pataky added.

Speculate to accumulate

FireEye's rise to prominence has come at a cost, with GAAP net losses hitting $120.6m in 2013 on billings that rose 94 per cent to $161.6m. The vendor is predicting 2014 billings of $540m to $560m and revenue of $400m to $410m, with sales and marketing expenses as a percentage of revenue in the range of 82 to 85 per cent.

But Pataky, who revealed that more than 100 channel heads will be added in 2014, said it is paramount that FireEye strikes while the iron is hot.

"I've been in the channel for 25 years during pretty explosive times for networking and security, and I don't know if I've ever seen an opportunity like this," he said.

"The traditional security technology that's been around for the past 20 years is now not keeping pace with threats. With the exception of FireEye, the threat actors have become smarter than the technology that exists today, so we're in a place where you need to invest, go big and build this market.

"We are looking straight ahead as a company. The Mandiant acquisition took people by surprise but with incident response as a company we are now closer to the breach, which enables us to make our VMs as smart as possible. This is a once-in-a-lifetime opportunity for the security market and we will continue to invest both for us and for our partners."

Barrie Desmond, group marketing director of FireEye distributor Exclusive Networks, said that midmarket enterprises were "in denial" over the threat posed by advanced malware.

"Everybody thinks it's not going to happen to them because all the publicity is around government-on-government attacks," he said. "But the reality is that APTs and zero-data attacks have commoditised and SMEs are as vulnerable as large enterprises. This is another conversation for resellers to have with their customer base."