Allot: Scaling Network-Based Cybersecurity Through Telecom Partnerships

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Regarding the CCaaS side, I know it's growing fast but is still small. How would you size the market opportunity for CCaaS?

Now, based on the report, you can see that Allot did not manage to achieve a hockey stick growth. So, the question is why. You're willing to go to the extent of financing the deployment into the network, putting marketing teams, and doing revenue sharing with the operator. The model itself suggests that you can achieve high opt-in rates. However, the market response was subpar compared to the promise. I would say it was disappointing. There were certain successes, but the offering didn't explode in the market. It's a complex issue, but in my assessment, there are a couple of things that Allot have underestimated. One is the operators' lack of initiative. Operators are not good at innovation and launching pioneering services, especially not under their brands. You live in the US, right? Verizon is pretty good at branding, as is AT&T. You find Verizon-branded services. T-Mobile, on the other hand, doesn't have too many value-added services branded under their logo. In Europe, it's almost nonexistent. If you go to the CMO, they must decide between creating and branding a new service or just reselling Netflix or Spotify. It's tough competition because it might be easier for the operator to package or offer a subscription to Spotify. You can look at their portfolio of services and see they either have Netflix, Spotify, or both, plus a few others. Selling security at the point of presence is not easy. Another factor is the overall security market competition. I gave you the pitch for the network-based solution, right? It's an easy opt-in, but McAfee and Symantec, along with others like F5, are selling around 4 or 5 billion a year to consumers. These are endpoint solutions deployed on devices, and part of it is sold through service providers' channels. Competing with established brands is quite challenging because of their branding. I know a lot of people using McAfee. Operators are concerned about competing with established brands. For example, I think Telekom in Germany is promoting a Norton. When it comes to the CEO's decision, they need to determine whether to target the 5% of savvy security consumers, which might result in a 60/40 or 80/20 split with Norton, or to promote their own solution based on their brand. It's not an easy decision. Some customers may choose to deploy or invest in their own solutions. For example, Vodafone is an alert customer. Verizon has made a few announcements recently in the US, but it's challenging to drive the market. The market doesn't come to you; you need to actively teach and work hard on each deal. It's not about grabbing the market; you need to create it and get the CMO and executive team on board to build their own service and deploy it in the network. This effort takes time because anything done on operator networks can take a year to a year and a half before launching the service. The sales cycle is long due to these reasons. You need to secure buy-in, deploy, and then reach monetization, which takes time. This is a significant challenge for many.

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