Though Microsoft (MSFT) says it doesn't plan to compete with firewall vendors, firewall security features added to the latest version of its Proxy Server software could shake up the firewall software market.
Proxy Server 2.0. shipping today, adds to the security features in version 1.0, where it handled access control and generic security functions. Version 2.0, priced at $995, adds firewall security features and includes packet filtering, reverse proxy, and SOCKS support, along with Web caching software to boost performance by up to 40 percent over Version 1.0, Microsoft said.
Firewalls are designed to block intruders from getting onto a company's internal networks via the Internet. If Proxy Server 2.0 adds many security features, it could hurt sales of firewall software for Windows NT in particular--and NT has been the market's hottest segment.
Microsoft said the customer base for Proxy Server has been small businesses with a single Internet connection shared by 20 or 30 people.
Proxy Server 1.0 allows firewall and filtering software vendors to build services on top of the Microsoft product, which lacked such common firewall features as packet filtering, network address translation, and problem alerts. Version 2.0 includes many of those features out of the box.
"We will continue to be complementary with firewall vendors," Microsoft's Lloyd Spencer said in an interview in June. "So far, all the firewall vendors we work with view this as positive, a way to complete what we have today."
Microsoft's interest in providing more firewall functions should come as no surprise, said Rob Enderle, an analyst at Giga Information Group. It's been clear since Microsoft introduced its first version of Proxy Server that it would add firewall functions.
Microsoft's decision could hurt makers of firewall software, such as Raptor Systems. In February, Raptor announced a low-end firewall, called "The Wall," targeted at small and mid-sized companies. The Centri firewall from Global Internet.com also targets that space; sometime Microsoft ally Cisco Systems announced this summer that it is buying Centri and Global Internet.com's software group.
Firewall companies are eager to repeat the message that Microsoft won't compete with them, though Microsoft has often been accused of breaking such promises in the past.
"We don't see Microsoft eating into our market," said Emily Cohen of Check Point Software Technologies, the top-selling firewall firm that does 40 percent of its business in NT sales. "[Customers] buy us as an industrial-strength sell. Microsoft readily acknowledges that [Proxy Server's firewall capability] is not intended to be a full-blown enterprise solution. We are working with them on having our system manage theirs."
Even if Microsoft jumps into firewalls, said Ted Julian of research house International Data Corporation, it will do so only on Windows NT. "Even if you assume they're coming out with both guns blazing, there's still the Unix market. That's not a bad place to be today--it's the bulk of the market."
But for a vendor such as Raptor, Microsoft's entry could begin to pinch. Raptor did the first NT firewall in February 1996, and it quickly accounted for 80 percent of Raptor sales.
"It could compete with [Raptor flagship firewall] Eagle," Raptor's Rob David acknowledged. "It's not clear whether [Microsoft's product] is a full firewall. Just because it has proxy services doesn't mean it's a firewall."