ServGate Strikes Dell Deal

Startup ServGate Technologies Inc. has teamed up with Dell Computer Corp. (Nasdaq: DELL) to exclusively resell its new range of security devices as the firm pushes toward profitability.

ServGates move could be a shrewd one, particularly given the security arms race currently taking place in the hardware market. The major vendors are scrambling to add security features to their product lines at a time when businesses are coming under increasing threats (see IBM Looks to Clean Up the Inbox, Cisco Teams Up With Trend Micro, and HP Enhances ProCurve Security).

Under the terms of the deal, Dell becomes the exclusive reseller of ServGate’s new EdgeForce M-Series product line, a family of seven firewall/VPN devices which also offer virus screening and Web filtering. The entry-level model, the M30, can support up to 35 users. The M1100 and M1110 are targeted at enterprises, and can support up to 1,000 users.

The challenge for ServGate is to increase its visibility against established security vendors such as Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (Nasdaq: JNPR). Hence the decision to team up with Dell.

Atchison Frazer, ServGate’s vice president of corporate marketing, believes the popularity of Dell desktops will lay the foundations for sales of additional products, namely the M-Series. Certainly, all the major vendors, from IBM Corp. (NYSE: IBM) to Sun Microsystems Inc. (Nasdaq: SUNW) and Hewlett-Packard Co. (NYSE: HPQ) use similar strategies to boost their revenues.Jeff Wilson, principal analyst at Infonetics Research Inc. believes that the partnership could reap dividends for ServGate. “It’s a good move to create an agreement like this with a company that has the coverage of Dell,” he says. “This is a good way to chip away and gain some [market] share.”

Although the deal is exclusive to Dell through the next quarter, Frazer refused to rule out the possibility of similar agreements with other vendors in the future. “IBM could be a reseller for us through their [global] services... HP is a logical company to look at.”

Will Dell eventually resell ServGate’s Accel application gateway, which has already won some success against Cisco’s PIX firewall (see Dalton Goes for ServGate Security)? Frazer confirmed, at this stage, there are no plans to extend the agreement to the Accel, although he admitted that there is plenty of potential with Dell. “Anything is possible,” he says.

The ServGate/Dell deal also underlines a broader security trend -- the move toward unified threat management (UTM) devices which combine firewall, intrusion detection and prevention, and gateway anti-virus. Analyst firm IDC recently reported that demand for the combined devices is growing at the expense of dedicated firewall and VPN devices.

ServGate, which emerged from stealth in 2002, earlier this year completed an $18 million mezzanine funding round led by ComVentures. The latest round was designed to boost the company’s sales and marketing efforts. Now, with the Dell partnership completed, Frazer hopes profitability is just around the corner. “We’re hoping to get that in the first quarter of '05.”If the Dell relationship increases sales then the company may also increase its 150-strong staff. “If we get velocity from Dell then I am sure we will,” says Frazer.

— James Rogers, Site Editor, Next-gen Data Center Forum