Businessmodel of Fortinet

Customer Segments

Fortinet has a mass market business model, with no significant differentiation between customers. It targets its offerings at enterprises, service providers, and government organizations. Its corporate customers come in all sizes and operate in a wide range of industries, including technology, telecommunications, financial services, retail, education, manufacturing, and healthcare.

Value Proposition

Fortinet offers four primary value propositions: accessibility, performance, risk reduction, and brand/status.

The company creates accessibility by making its network operating system flexible enough for implementations of all environments and sizes, from small businesses to carriers. The network security platform has solutions for access (secure access), the edge (next generation firewall), and the core (internal segmentation).

The company enhances performance by providing an end-to-end, integrated offering with solutions for network, application, endpoint, data center, access, and Cloud security. These components work together to create a powerful system, linking varying security sensors to effectively respond to possible threats. The system is able to accomplish this task in real-time with no slowdowns.

The company has demonstrated a strong ability to reduce risks. Its solutions are backed up by security services created by FortiGuard Labs. They are regularly verified by entities such as NSS Labs, AV Comparatives, Virus Bulletin, and ICSA to provide top-of-the-line security effectiveness. Specific evaluation results include the following:

• A VB Web test noted that FortiGuard Web Filtering stopped 97.7% of direct malware downloads. It is currently the sole filtering service in its sector to have received VB Web certification.
• A VB100 Proactive and Reactive Test selected Fortinet as one of the most effective AV solutions for blocking zero day and known threats.
• AV Comparatives bestowed its top award, the Advanced+ rating, to the company for file detection, anti-phishing, and real-world protection. The company has established a strong brand as a result of its success. It is the third-largest network security appliance vendor, and has been recognized as the second-largest Data Center Firewall firm. It has more than 270,000 customers, including the majority of the Fortune 500. It has also won many honors, including 2016 recognition as the Network Security Appliance Vendor of the Year (Integrator Awards), the Intelligent Vendor of the Year award (Intelligent CIO Technology Excellence Awards), the Network World ME award in the Network Security Vendor of the Year category, and the Leadership Award for Managed Security Service Providers Market (Frost & Sullivan).

Channels

Fortinet’s main channel is its distribution network. It sells its offerings to distributors, which include Exclusive Networks Group, Ingram Micro, Fine Tec Computer, and Arrow Electronics. These firms then sell the offerings to enterprise-focused and networking security resellers, which include Tech Data and Westcon. The resellers then sell the offerings to end-customers, which include enterprises, service providers, and government agencies. Fortinet also has a sales team that sells its products and services directly to certain end-users. The company promotes its products and services through its website, social media pages, and attendance of seminars, conferences and summits.

Customer Relationships

Fortinet’s customer relationship is primarily of a personal assistance nature. It offers the following customer support services:

FortiCare Support – Includes FortiCare 24X7 Comprehensive Support (round the clock suport), FortiCare 8x5 Enhanced Support (support during local business hours), and FortiCare Premium Services (customized support for clients with mission-critical networks).

Premium Support – Includes service activity reporting; weekly, monthly, or quarterly service reviews; dedicated account managers; and on-site maintenance visits.

Premium RMA – Includes hardware replacement services for the most demanding requirements of clients with mission-critical networks.

Professional Services – Consists of services for the management of a given project, including architecture and design services, implementation and deployment services, transition services, and operational services; they are provided by a professional project manager/consultant.

Fortinet also offers a wide range of training courses and corresponding assessments on its products. These include the following:

Fortinet Learning Center – An online resource for training and certification

Network Security Expert (NSE) Program – An eight-level certification program featuring courses and experiential exercises

Fortinet Network Security Academy (FNSA) – A global training and certification program that collaborates with academic institutions, veteran programs, and non-profit agencies to educate students around the world

Despite this orientation, there is a strong self-service element. The company’s website features a “Product Resource Center” that includes videos, analyst reports, technical documentation, and product downloads and demos. There is also a community component in the form of a forum.

Key Activities

Fortinet’s business model entails designing and developing its products and services. It outsources the manufacturing of its products to various contract manufacturers and original design manufacturers; they include Flextronics International, Adlink Technology, Micro-Star International, Senao Networks, and several Taiwan-based manufacturers. Once built, the items are delivered to its logistics partner in Taoyuan City, Taiwan or its California warehouse, where quality-control testing and accessory packaging takes place. Fortinet’s product components are sourced from different suppliers, including CPUs (Intel), network chips (Broadcom, Marvell, and Intel), and solid-state drives (OCZ Technology Group and Samsung Electronics).

Key Partners

Fortinet maintains the following two types of partnerships:

Alliance Partners – Firms that integrate their complementary offerings with the Fortinet Security Fabric in order to build even more effective solutions for customers. Specific partners include IBM, Microsoft Azure, Hewlett-Packard Enterprise, Gigamon, Nuage Networks, VMware, and Verisign.

Managed Security Service Providers (MSSPs) – Includes network service providers and system integrators who sell Fortinet’s offerings to their customers. The company provides them with training and marketing tools as well as general support. Specific partners include Level 3, BAE Systems, EarthLink Business, Lightedge, Optiv, Solutionary, Trustwave, NTT Communications, and Verizon.

Key Resources

Fortinet’s main resource is its proprietary platform, which includes its FortiOS operating system, FortiASIC hardware architecture, and related networking and security functions. It depends on its engineering employees to maintain and update the platform. The company relies on its team of channel account managers and sales staff to support its channel partners. Lastly, it places a high priority on its intellectual property, with 300 issued and 250 pending patents.

Cost Structure

Fortinet has a value-driven structure, aiming to provide a premium proposition through extensive personal service. Its biggest cost driver is sales/marketing, a fixed cost. Other major drivers are in the areas of research and development, a fixed cost, and cost of product, a variable expense that includes cost of materials, shipping costs, and warranty costs.

Revenue Streams

Fortinet has two revenue streams:

Product Revenues – Revenues generated from the sales of its network security solutions.

Service Revenues – These include revenues generated from the following:

• FortiGuard security subscription services related to antivirus, application control, intrusion prevention, web filtering, ATP, anti-spam, and vulnerability management updates
• FortiCare technical support services for software updates, Internet access to technical content, , maintenance releases and patches, online and phone access to technical support personnel, and hardware support
• Professional services, namely technical and project management services
• Training services, namely online and in-person courses