Smart partnership, product positioning helps Montreal firm find success

Jean-Marc Robillard had a hardware problem – it was too expensive for small clients to buy, but not running fast enough to serve the needs of big clients. And in the world of e-mail security, you can’t count on Goldilocks to come along and choose the product that sits in the middle.

Robillard is director of product management at Vircom Inc., an e-mail security software company in Montreal.

Up until October 2008, he said, Vircom had been counting on another provider for the server hardware appliance it needed to put its software to work. But this just wouldn’t work anymore.

“They were slow to update their computing power to meet the increasing demand our software was putting on it,” he says. “Imagine trying to run Windows Vista on a laptop from 1999.”

A one-product company, Vircom found its customer base dwindling as its offering became too expensive for the little guy, but not powerful enough for big business. The appliance could only filter through four or five messages per second, resulting in a backlog of e-mails that stifled productivity at larger clients.

So the Montreal firm decided it was time for a change.

Enter Canton, Mass.-based NEI.

The appliance vendor was selected by Vircom from five different vendor proposals.

Not only has the new partnership helped Vircom boost its product speed and lower its price, but it has also enabled the Montreal firm to diversify its product line — making it more attractive to different customer segments.

And that, in turn, has led to an increase in sales despite the recession, and a positive outlook for the future.

Vircom launched a new product line — modusGate Appliance — with NEI’s hardware.

modusGate comes in three flavours — M100 for the small to mid-sized market, M150 for the mid-market and enterprise, and MBlade for carriers and service providers.

Stratification works well in the appliance market, says Mike Slattery, director of product development at NEI. “It’s very price sensitive, which is why we encouraged Vircom to develop more than one product because a ‘one-size-fits-all strategy’ is not effective in this market.”

Vircom’s software combs through incoming e-mails with a sophisticated artificial intelligence to help weed out spam and malware, leaving only wanted e-mails to get through to the corporate network.

Not only does NEI’s server hardware have the extra horsepower needed to let Vircom’s software do its job, Robillard says, it also has a process that boosts the software’s efficiency.

“NEI guides on ‘OS hardening’, he said. This means locking down the system to fortify it against malicious attacks, have no unnecessary processes, and no open ports other than those required.

“We worked with them on a low-cost model less expensive than the one from [our previous provider], but which performed 20 per cent better,” the Vircom executive said.

The M100 is capable of processing 11 to 14 messages per second and comes with an annual subscription price tag of $3,499 for 150 users. The M150 offers a bit more processing power for $4,100 a year, and the enterprise-level MBlade starts at a cost of $25,000 a year for 500 users.

The price discrepancy is because lower-end models are meant to be stacked as use increases, Robillard says. The MBlade is a one-box product that can support up to 60,000 users and process 17 million e-mails a day.

It’s a smart way to position products for the small business market, says Sau Lam, a senior analyst with AMI Partners. By offering three products instead of just one, Vircom will likely see a better return on investment.

“Price and manageability are the two biggest factors small businesses consider when choosing a new software offering,” she says. “These companies often have limited IT staff or none at all.”

So far, it seems to be working for Vircom. Sales are up 10 per cent compared to this time last year, Robillard says. “In this economic climate, that’s great. Security products are seen as a necessary purchase.”

He said Vircom has even managed to poach a couple of customers from Google’s Postini service, a cloud-based approach to e-mail security.

“Based on their feedback, the first year on Postini has attractive subscription rates, but then they jack up the price several fold,” he says. “We offer price protection, sort of like rent control.”

The Montreal company has more expansion plans. Two new product releases are expected for 2009, with the first in June and another in the Fall. It will also seek to offer compliance assurance services in the near future.

With that sort of product range, this company’s success is more of a reality than a fairy tale.

Share on LinkedIn Share with Google+