marketing programs at Network Engines.
Company: Network Engines
Type of business: Information-security services
Location: Canton, Mass.
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Employees: 90
Net Revenue: $14.5 million
In the exploding niche market that provides information-security services, Network Engines, a Canton, Mass.-based firm is prospering by giving smaller firms and satellite offices the kind of easy-to-use, plug-in hardware appliances that the kings of the industry don’t provide.
The company develops, manufactures and distributes security and storage software.
The research firm IDC recently released a study predicting that the market for information-security services will grow to more than $23.5 billion by 2007, as companies generate a never-before-seen level of data that they want to store and keep private. But many smaller firms don’t have the resources to manage, protect and store their own digital records. Many branch offices for large companies also find themselves in the same boat.
At the same time, many software engineers and vendors for security and other software struggle to build hardware to house their software and then to get their applications sold and installed. And yet in recent years the major players in the data-protection industry, such as Compaq and Dell, have reduced their appliance businesses.
Enter, Network Engines. Founded in 1997, the firm partners with software companies to develop, manufacture and distribute server appliances for storage- and security-networking applications throughout the world.
Server appliances are stand-alone pieces of hardware that can be attached to servers to protect and store information from the server. Essentially then, Network Engines takes another company’s software, installs it on its own hardware and distributes the finished product so that it can be plugged into networks that need data protection and storage.
“Security issues are hot-button issues these days – there are so many security products out there, a lot of companies are trying to get into it – and it’s nice to have an appliance to plug into to do that work,” said Jeanne Friedman, Network Engines’ vice president of marketing programs. “After software is installed in one of our appliances, you make sure you have your Internet connection, your network connection, and it’s essentially done.”
Some of the software companies that operate inside of appliances made by Network Engines are Network Intelligence, Network Logging, Tumbleweed, Proficient Networks, Funk Software, Blue Cat and Silent Runner, a division of Raytheon.
Because Network Engines works with a software manufacturer to custom-build hardware, the firm is filling a niche that the giants of the data protection and storage industry seemingly don’t have time for. After being custom-fit into a piece of hardware that can be easily installed onto a server, such software offers several advantages to small and medium companies, said Friedman. Because they are simple to use and easy to install, they help smaller firms cut down on IT staff.
“Particularly in the security industry, with a company like Cisco, the products they make are one-size-fits-all,” said Friedman. “With Dell, they’re providing you a box, it’s like the old days when Ford built the Model T and as long as you wanted the color black you were fine. Dell won’t customize, so a software company has to do a lot of work. Dell’s model only makes sense at a certain volume level, and many companies don’t make that volume cut.”
In a repositioning of the firm, Network Engines added a distribution component to their business in December of 2002 when it acquired TidalWire, a distributor of storage networking products serving a customer base of more than 500 clients.
After making the acquisition, Network Engines reported significant improvement in financial results for its second quarter, which ended on March 31.
The firm reported net revenues of $19.4 million, a significant increase from $3 million reported in the second quarter of fiscal 2002.
“Our results this quarter were particularly encouraging given the time and effort expended toward integrating Tidal Wire and Network Engines operations,” John Curtis, president and CEO of Network Engines, said in a statement.
“Our new distribution capabilities have significantly enhanced our ability
to provide a full range of services to our partners. We have diversified our
customer base and revenue sources while continuing to grow our strong relationships
with leading independent software vendors, OEM customers and value-added resellers.”
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