July 25, 2017

FEYE - FireEye Partners Remain Optimistic on Outlook, but Challenges Remain

By Jaclynn Anderson
FireEye partners acknowledged the improvements CEO Kevin Mandia is making to the channel, pipelines are improving and Helix is perceived as helping U.S. partners, but renewals activity remains mixed.

Background: OTR Global’s April snapshot on FireEye with five sources indicated channel relations were improving for FireEye, though FireEye’s renewals remained at risk from competitive threats. Partners also noted it was too soon to tell if the Helix platform would have any noticeable impact on FireEye’s 2H17.  

Mandia Focused on Reinvigorating Channel
FireEye channel partners said the channel relationship with FireEye Inc. continues to improve, consistent with trends in OTR Global's April snapshot. Multiple partners specifically called out a change in how the company treats the channel under CEO Kevin Mandia’s leadership. One U.S. partner said, “Anything around the channel that Mandia has done in his first year has been good, and he has been pretty focused on getting in front of partners.” Another U.S. partner said, “They are definitely improving. I think Kevin and team are coming to the realization that they need to leverage the channel and not [simply] that they will sell for them. They are getting revived with the partner community.”

Partners noted improvements include increased communication, improved pricing and a reduction of aggressive tactics that angered the channel. A global partner said, “I think six months ago we started to see them turn the corner. There is more interaction now. In the last 90 days, I haven't seen any deals gone direct or them take a deal to another partner, so that is a good signal. Much has vastly improved versus 12 months ago and improved still from six months ago.” A German partner said, “The people are available, try to keep in touch and take much more care of the customers. Questions are answered faster. They presented a new attractive pricing model and want to get closer to the market, to the end customers as well as to service providers like us as the interface between product and end customer."

2Q17 Lacking, but Pipelines Improve
FireEye channel partners said their 2Q17 FireEye business was weak. A U.K. partner said, “FireEye is coming back up, but we are not seeing a lot of engagement. They have just hired a new EMEA marketing guy, so things will start coming through, but as of yet we are not seeing any great movement. FireEye was punched and punched for so long by the competition! Now they are stuck being seen as a sandbox player.” A German partner said competition and pricing hurt their 2Q17 business. He said, “The problem was the product portfolio didn't allow an appropriate price adjustment to the different customers. You had to buy an expensive big box including everything. FireEye changed that, which is very helpful for the future.”

Looking forward, partners said pipelines are in line or better than plan. A German partner said, “Our pipe looks very satisfying, in line with our expectations. Nothing significantly negative or positive.” A global partner said, “Our pipelines are good, slightly under two times what we budgeted based on the fact that when we were budgeting the relationship wasn't strong.”

FireEye Renewals Steady
FireEye partners mostly see renewal rates remaining steady, though partners vary on what percentage of customers typically renew. Three partners said FireEye renewals remain strong. One German partner said, “About 80% [of customers] are renewing, and the rest change vendors in order to benefit from the ongoing price war. Customers who run FireEye on their own, who have their own hardware, renew at 100%. It's a good product and customers who reasonably run the solution are absolutely convinced of it.” A U.K. partner said, “I’m not sure of the percentage, but renewal rates are good.” Another U.K. partner said, “I don't think anyone is dropping [FireEye], but they might be adding other technologies on top or in back. I can only tell from the renewal run rates, the renewals aren't falling off at all in terms of dollars.”

Two partners said FireEye renewals were consistently weak. A global partner said, “I think FireEye has always had a problem with the renewal piece because they are so expensive. They are reliant on net-new deals.” A U.K. partner noted demand for APT products continues to grow, but FireEye is losing the attention of potential customers. He said, “We don't see people dropping APT coverage. If anything, they want more of these advanced products. I'm just not sure they are asking for it from FireEye.”

One partner noted they were in the renewal process with customers now, and expected half to renew. He said, “It's difficult to say because we have a couple of customers who are in the renewal phase right now and who haven't decided yet [if they will stay with FireEye]. They want to know about FireEye's technological road map in the past and for the future and what its competitors are doing. I would say from a gut feeling about 50% will renew. Competition significantly caught up and offers strong solutions; for instance, Lastline Inc. [and] Palo Alto Networks Inc. offer something, and of course not to the same extent, Symantec Corp. Pricing is certainly an issue. When FireEye started, they offered unique technology that nobody else could do and prices were extremely high.”

U.S. Partners Optimistic on Helix
FireEye partners in the United States, including a global partner with U.S. business, were positive on demand trends for Helix, FireEye’s unified and automated security intelligence platform. A global partner said, “We are definitely seeing traction for Helix, and coupled with our managed service, it makes it even better. We are unexpectedly seeing growth with Helix. We have 12-15 deals with that kind of activity. The feedback from clients is positive. Once they figure out how to use it, they like it. If the deals close it could be 20% of our Q3 FireEye number.” A U.S. partner said, “It’s impactful and we are going to market with Helix in demand, and I feel good about our relationship with FireEye.” Another U.S. partner said Helix was only slightly helping FireEye business. He said, “It’s not having an impact yet, but Helix definitely comes up.”

Partners in Germany and the United Kingdom were less optimistic on the impact of Helix. A U.K. partner said, “Helix is OK, but I don't think it is anywhere near where FireEye expected [in terms of numbers]. It's not differentiated. Palo Alto and Check Point [Software Technologies Ltd.] offer similar options. Customers will think, why put that piece in when the existing perimeter has it?” A German partner said, “Demand for Helix is rather restrained. I don't think it will play an important role in 2H17. But it's a brand new product and these things usually need some time until they are established. I think it's still a niche product, which is difficult to position. There is still a lack of basic understanding for such a product.”

Contributors: Robert Fischer and Suzanna Kerridge

What is an OTR Snapshot?

OTR Snapshots are direct feeds from our editors expressing their views on key issues and events in their industries, within and beyond our core coverage. Snapshots feature industry insights, source commentary, and general observations.