Network Associates noses around for new Sniffer markets

Network Associates is trying to expand the market for its venerable Sniffer network-analysis product line, but lagging revenue and image problems have put Sniffer's future in question.

Following a round of layoffs and with revenue lagging at Network Associates Inc.'s Sniffer business unit, some industry observers say that the network-analysis stalwart is facing some significant challenges -- and that its future may be in question.

In January, the Santa Clara, Calif.-based company laid off a number of workers in its Sniffer group, and reassigned other Sniffer workers to its Bangalore, India, office, said Christopher Thompson, vice president of marketing for Sniffer. The company would not say how many people were laid off and reassigned.

The moves, which Thompson said were part of an effort to focus more attention on application performance management, come at time when the company is working to pump additional life into Sniffer by expanding its market.

In the past year, Network Associates has launched 25 new Sniffer-related offerings, Thompson said, extending the product line for carriers, small businesses and high-speed networks.

This month alone, the company announced two new products: one that is designed to analyze 10 Gigabit Ethernet traffic, and another that captures and replays network traffic to help businesses assess damage from network attacks.

These announcements were meant to broaden the market for Sniffer beyond the "network-engineer ghetto," said Jean-Pierre Garbani, a vice president at the Cambridge, Mass.-based research firm Forrester Research.

Sniffer has been considered the network engineer's best friend for so long that the product has been marginalized. Other groups within IT organizations don't see Sniffer as a versatile tool, Garbani said.

Sniffer is in part a victim of its own success, said Elizabeth Rainge, director of network management for International Data Corp. The product has become like Kleenex for the network engineer, she said -- a necessary but commoditized tool.

The problem, Garbani said, is that the network engineering market is only so large. And, at this point, the market is well saturated by Sniffer and its small group of competitors.

That is largely a marketing and strategic problem for Network Associates, he said. The Sniffer line has performed well over the years and has a good reputation, but the company's efforts to broaden its customer base have not been successful, Garbani said.

A shifting market

Additionally, the company is coping with the changes in the network management market. Seven years ago, running a network used to mean managing hubs, routers and switches, he said. Now the job of network management is much broader than that.

"Today, when someone says 'network management,' they are talking about all of the networked elements of an infrastructure: the server, the database server, the network itself," Garbani said.

In that context, companies have turned to organizations like Computer Associates International Inc., which offer an array of agents with their products.

Thompson agreed that Network Associates must work to broaden its market reach and, in that process, the Sniffer name may no longer be an asset.

"The name 'Sniffer' can be a liability in some markets," Thompson said. He noted that upper-level decision makers would rather refer discussions about Sniffer to network managers, "and that may not really be where we want to sell the product."

In an effort to create some distance between Sniffer and the company's new products, Network Associates is renaming many of the Sniffer products, using monikers that disguise their origins. Products with names such as 'InfiniStream' have emerged from the Sniffer unit during the past year.

A rich future?

Despite the new product launches, Sniffer suffered a decline in revenue in 2003. In 2002, the Sniffer unit was responsible for $265.1 million in revenue. Last year, that number shrank to $209.2 million. Sniffer currently accounts for about 20% of Network Associates' overall revenue.

Thompson said that, while 2003 was a slow year, the fourth quarter was strong, and he expects 2004 to be better.

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Still, it may be tough for Sniffer to boost its sales significantly, Rainge said. Even though the product is a handy tool that many network engineers turn to, it is unlikely that it will be able do more than solidify its leadership position, Rainge said.

Laura Chappell, founder of the San Jose, Calif.-based Protocol Analysis Institute, said that Sniffer and other protocol-analysis tools have the potential to be used as security tools. Since they already analyze network packets, they lack only the tools to interpret that data.

It is yet to be seen whether Network Associates' bid to broaden Sniffer's market will work, but the company must try. Without a broader market, Garbani said, Sniffer's revenue will likely stagnate.

"The future for Sniffer may not be very rosy," he said.

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