When the opening bell sounds the opening of NASDAQ training one day this week, it will have a new security company on its roster under the ticker symbol: FTNT. Fortinet, the 9-year-old security appliance vendor, is going public this week, looking to raise more than $120 million with an IPO valued stock offering between $9 and $11 per share.

Founder and CEO Ken Xie (right) is looking to capture lightning in a bottle for a second time and under eerily similar economic conditions. His last company, NetScreen, went IPO at the height of the dot-com bust in 2001. While other security vendors floundered under the weight of that recession, NetScreen with its high-performance firewalls was a celebrated Wall Street launch as analysts looked for it to challenge market leaders Check Point and Cisco. In 2004, Xie and company cashed out in 2004 when Juniper Networks bought the firm for $4 billion; the deal turned Juniper into one of the security elite overnight.

What makes the Fortinet IPO interesting is not just the coincidental circumstances of its going public, but the technological shift happening this time. As the world is moving toward greater virtualized environments and cloud-based applications, the Fortinet IPO could be a solid barometer of how the market values specialized, high-performance security appliances.

Fortinet (a company I once described as “scrappy”) was built on the premise of reducing latency through high-performance, ASIC-based security appliances. Its products are essentially a hybrid UTM and network switch that sits in-line to inspect traffic for everything from viruses to anomalous URLs and protocols to spam. It differs from competitors not just in form factor (a purpose-built appliance), but all of its core functionality is part of the underlying operating system—FortiOS. Users are able to activate different applications through license purchase. The strategy has since been mimicked by Check Point and its software blades.

But does the world need more heavy iron sitting on the network? The presumption is that an increasing amount of security inspection and response will shift to the cloud, where it's more easily managed and scales better. Security vendors such as Symantec, McAfee, Trend Micro, SonicWall and Blue Coat have field cloud-based augmentation services, hosted security services and hybrid cloud-appliance models to increase responsiveness without expanding the on-premises or client-side security footprint.

Arguments against heavy security iron presume that all enterprises and SMBs are ready for security in the cloud. It's a trend that's not being seen by some vendors. Recently, Symantec CEO Enrique Salem told partners that the cloud will be an important part of the security equation, but it won't replace conventional security technologies anytime soon. SonicWall, one of Fortinet's key competitors, continues show solid revenue performance and is being rewarded by analysts with buy ratings. The same can be said about Check Point and Juniper. A successful Fortinet IPO will likely have a ripple effect among the public security vendors, sending their stocks higher as investors look to balance their portfolio. A poor Fortinet showing on Wall Street could signal investors' hidden skepticism about the future of the security hardware market.

Another interesting thing to watch in the Fortinet IPO is the impact of the channel on investor perceptions. A couple of analyst reports noted that the channel is a drag on Fortinet's performance. The company has pursued a strategy of pushing sales and tier-1 support to its channel partners. Analysts say that Fortinet partners aren't necessarily staffed or knowledgeable enough to get the job done, putting more pressure on the direct sales team that leads to a higher cost of sales. Analysts seem to blame Fortinet management for this problem, and believe it could be resolved with a more consistent channel strategy and execution. However, this is a growing issue among security vendors that are caught in the crossfire of having the desire to be channel friendly, the need for high-quality customer service and the desire to capture more services revenue.

Interestingly, Fortinet shares one more similarity with NetScreen: the lack of brand awareness. In 2001, NetScreen was highly regarded for its products' performance, but that reputation only extended to security geekdom. It was still a relative unknown compared to the likes of Check Point and Cisco. Analysts say the company needs to play catch-up with rivals in marketing and brand awareness. A good IPO will help lift its profile.

When Netscreen went public in December 2001, it opened at $14 per share and immediately shot up to the mid-$20s. Should Fortinet do the same, it will show that security—particularly hardware and appliances - has a sustainable future. The next question, of course, will be how long before one of Fortinet's large rivals moves to acquire the company and its $240 million revenue stream the way Juniper did with NetScreen?