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Correspondence Letter

 [Letterhead of WatchGuard Technologies, Inc.]

 December 23, 2005

 VIA FACSIMILE (202) 772-9210 AND EDGAR

 Ms. Kathleen Collins

 Accounting Branch Chief

 Division of Corporation Finance

 Securities and Exchange Commission

 450 Fifth Street, N.W.

 Washington, D.C. 20549

Re:

WatchGuard Technologies, Inc., Annual Report on Form 10-K for the year ended December 31, 2004, filed with the Securities and Exchange Commission on March 31, 2005; Quarterly
Report on Form 10-Q for the quarter ended September 30, 2005, filed with the Securities and Exchange Commission on November 9, 2005; Current Reports on Form 8-K filed with the Securities and Exchange Commission on August 3, 2005 and
November 3, 2005; (File No. 000-26819)

 Dear Ms. Collins:

 This letter sets forth the response of WatchGuard Technologies, Inc., a Delaware corporation
(the “Company”), to the comments set forth in the Staff’s letter dated November 28, 2005 in connection with the Company’s annual report on Form 10-K for the year ended December 31, 2004, filed with the Securities
and Exchange Commission (the “Commission”) on March 31, 2005 (the “Form 10-K”), the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2005, filed with the Commission on
November 9, 2005 (the “Form 10-Q”) and the Company’s current reports on Form 8-K filed with the Commission on August 3, 2005 (the “August Form 8-K”) and November 3, 2005 (the “November
Form 8-K” and together with the August Form 8-K, the “Form 8-Ks”). For ease of reference, we have set forth each comment in the Staff’s letter followed by the Company’s response.

 Form 10-K for the Fiscal Year Ended December 31, 2004

 Note 2. Accounting for Goodwill and Intangibles with Definite Lives, page 74

 Comment No. 1

 We note your response to our Prior Comment No. 2. Specifically tell us how you
considered the guidance in paragraphs 30 through 36 of SFAS No. 142 in determining that you have only one reporting unit. Confirm, if true, that no discrete financial information is reviewed by segment managers, such as product or services
gross margins, operating results of acquired entities, geographic results etc. In addition, provide a detailed explanation of how you used your discounted cash flow analysis to determine the fair value of the reporting unit (reference paragraphs 19
through 22 of SFAS No, 142).

 Response to Comment No. 1

 As disclosed in the Company’s 2004 Annual Report on Form 10-K, the Company operates
in a single business (or operating) segment related to Internet and computer security and provides hardware, software and services as a complete security solution. The Company considered guidance provided in paragraphs #30–36 of Statement of
Financial Accounting Standards (SFAS) 142, “Goodwill and Other Intangible Assets,” in reaching its conclusion that it has only one reporting unit.

 Utilizing the definitions provided in paragraph #30 of SFAS 142 and the relevant provisions of SFAS 131, “Disclosures about Segments of an Enterprise and Related
Information,” and related interpretations, the Company determined that its one business (operating) segment is comprised of a single component and represents one reporting unit. This determination was based on the fact that management does not
review or assess a complete and regularly-prepared set of financial statements other than at the consolidated (top) level for the single segment described above. There is only one reporting unit for which operating results are regularly reviewed by
the Company’s chief operating decision maker in order to assess resources and operating performance. A complete set of discrete financial statements is not available other than at this consolidated level. In addition, the Company does not have
individuals within the Company who manage a discrete portion of the business in a way that would indicate they are managing a separate segment or component of the segment. Accordingly, the Company confirms that no discrete financial information
(such as product or services gross margins, operating results of acquired entities, geographic results, etc.) for a portion of the Company’s business that could be considered a separate segment or component of the segment is reviewed by any
individual in the Company other than on an ad hoc basis and in a form that involves estimates due to process and system limitations discussed below. Due to limitations in the Company’s current accounting systems, the Company cannot gather and
assess profitability by product line or geographic region. Although certain revenue and/or expense information is available by major geographic regions (e.g. Americas, EMEA and APAC) or product lines, the information necessary for matching costs of
revenues and operating expenses to these regions or product lines, as well as other measures of profit and loss is not captured, prepared or reported. Further, the company does not fully measure regional or product line gross margins, because
back-end rebates, warehousing, handling, rework and customer support costs are not traced separately, and therefore revenue margins for any discrete portion of the business cannot be determined. The

 company does not fully measure (with the exception of sales-employee-related direct selling expenses and some selected
marketing costs by region or cost of goods by product), any other operating expenses in support of distinct geographic regions or product lines, therefore there is no true measurement of geographical or product line profit/loss.

 Based on our assessment above, the Company appropriately tested goodwill for impairment at
the (single) reporting unit level. All acquired assets, assumed liabilities and goodwill were properly assigned to the Company’s one reporting unit as of the acquisition date.

 The process used in evaluating potential goodwill impairment began with a comparison of the Company’s one reporting unit fair value
with its carrying amount, including goodwill. For this purpose, the Company retained, and received the assistance of, a third party valuation expert and used a discounted cash flow analysis in determining the fair value of the reporting unit,
detailed as follows.

 The Company used the income approach, which is an
estimation of the present value of the future monetary benefits expected to flow to the owners of a business. It requires a projection of the cash flows that the business is expected to generate. These future cash flows are then discounted to
present value (using a rate of return that accounts for the time value of money and the appropriate degree of risks inherent in the Company’s line of business).

 When applying the income approach, the cash flow a business is expected to generate is discounted to its present value using a rate of
return that reflects the relative risk of achieving the cash flow and the time value of money. This return, known as the weighted average cost of capital (“WACC”), is calculated by weighting the required returns on interest-bearing debt
and equity capital in proportion to their estimated percentages in the expected capital structure of the business. The estimated WACC should reflect macroeconomic, industry, geographic, and firm-specific factors in determining the degree of
perceived risk associated with the projected cash flow.

 The following is a general discussion of the method used by the Company in the derivation of its WACC.

 The general formula for calculating the WACC is:

WACC

=

Kd * (d%) + Ke * (e%)

WACC

=

Weighted average cost of capital on invested capital;

Kd

=

After-tax rate of return on interest-bearing debt capital;

d%

=

Interest-bearing debt capital as a percentage of Total Invested Capital;

Ke

=

Expected Rate of return on common equity capital;

e%

=

Common equity capital as a percentage of Total Invested Capital.

 The rate of return on interest-bearing
debt capital (“Kd”) is the rate a rational interest-bearing debt investor would require on interest-bearing debt. Since the interest on debt capital is deductible for income tax purposes, the Company used the after-tax interest rate in its
calculation. The effective income tax rate is the federal income tax rate.

 The after-tax rate of return on debt capital was calculated using the formula:

Kd

=

K * (1 - t)

Kd

=

After-tax rate of return on interest-bearing debt capital;

K

=

Pre-tax rate of return on interest-bearing debt capital;

t

=

Effective federal income tax rate.

 The Company used the Capital Asset
Pricing Model (“CAPM”) to estimate the required return on common equity capital. CAPM postulates that the opportunity cost of equity capital is equal to the return on risk-free securities plus the systematic risk (beta) of a business
multiplied by the market price of risk (equity risk premium) plus an added return for certain business specific characteristics.

 The CAPM rate of return on equity capital was calculated using the formula:

Ke

=

Rf + B * (Rm -Rf) + Rs +Rc

Ke

=

Rate of return on common equity;

Rf

=

Risk-free rate of return;

B

=

Beta;

Rm - Rf

=

Market risk premium;

Rs

=

Small stock premium;

Rc

=

Company specific risk premium.

 The risk free rate of return is the
current risk free rate of return on U.S. Treasury securities with an investment horizon equal to a reasonable holding period for a hypothetical investment in the business.

 Beta is a risk measure that reflects the sensitivity of a company’s stock price to the movements of the stock market as a whole.
Practical application of the CAPM relies upon the ability to identify publicly-traded companies that have similar risk characteristics as the Company in order to derive meaningful measures of beta for the Company. Betas reported in public sources
are “levered”, which incorporates the added risk to a stockholder due to the debt financing of the business. To derive a beta applicable to the business based on our guideline companies, the reported levered betas must first be unlevered
and then relevered at assumed industry debt levels.

 The equity risk premium is
the expected return on a market portfolio of stocks (Rm) less the risk free rate (Rf). Since the expectations of the average investor are not directly observable, the equity risk premium must be inferred using one of several methods. One approach is
to use premiums that investors have historically earned over and above the returns on long-term Treasury bonds. The premium obtained using the historical approach is sensitive to the time period over which one calculates the average.

 The CAPM rates of return are often adjusted based on certain company specific characteristics
including size and geography. A small stock premium (Rs) reflects the extra risk of an investment in a small or mid-sized company in relation to returns achieved by more stable, larger companies. This premium is derived from historical differences
in returns between smaller companies and large companies using data published by Ibbotson Associates. The Company specific risk premium (Rc) provides an added return that accounts for certain risks in the business as identified by management.

 The Company’s estimate of the typical capital structure was based on observing proportions of interest-bearing debt
and common equity of publicly traded companies in similar lines of business to WatchGuard.

 Based on the preceding discussion, the Company concluded that typical investors would require a WACC of approximately 20.0% for an investment in WatchGuard’s one Reporting Unit.

 Using a discounted cash flow (“DCF”) analysis, the Company forecasted the debt-free
free cash flow its business is expected to generate and that is available either to reinvest in new or existing businesses or to distribute to investors (both debt and equity investors). The projected cash flow is discounted to its present value at
the Company’s WACC. The discounted stream of future cash flow reflects the current estimate of the value of the invested capital of The Company, or its business enterprise value (“BEV”). In the DCF analysis, projections were prepared
for the Company’s revenue, cost of goods sold, selling general and administrative expenses, corporate income taxes, depreciation, incremental working capital, and capital expenditures. A present value factor derived from the WACC was applied to
the cash flow over the calculation period. The sum of the present value of the cash flow over the calculation period was then calculated. The residual value was calculated by applying a capitalization rate to the normalized residual year after-tax
cash flow. The capitalization rate was calculated by subtracting the long-term growth rate from the WACC discount rate. The Company then applied a present value factor to estimate the present value of the residual cash flow for the final year of our
analysis and thereafter. The sum of the present value of the terminal year and the present value of the after-tax cash flow over the calculation period was then calculated as the basis for the Company’s fair value of invested capital. The
conclusion, based on the income approach as described above, was that the Company estimated the fair value of invested capital of WatchGuard to be in excess of its one Reporting Unit fair value, on a marketable controlling interest basis, as of the
Valuation Date. The Company does not deem there to be any impairment of value to the goodwill balance reported.

 Comment No. 2

 We note your response to our Prior Comment No. 3. We further note the expanded disclosure in your earnings release furnished on Form 8-K and filed on November 3, 2005 includes reconciliations of some of the
non-GAAP measures presented in your non-GAAP pro forma consolidated statements of operations. However, Item 10(e)(1)(i)(B) of Regulation S-K requires disclosure of a reconciliation for each non-GAAP measure presented. Revise to include
the information required by Item 10(e)(1)(i)(B) for each line item in your non-GAAP presentation that has been adjusted such as cost of product revenue, cost of service revenue, sales and marketing etc.

 Response to Comment No. 2

 In its future earnings releases and filings with the Commission, the Company will expand its
non-GAAP reconciliation to treat items such as cost of product revenue, cost of service revenue, sales and marketing, etc. as individual non-GAAP measures and provide the applicable disclosure required under Item 10(e)(1)(i)(B) of Regulation
S-K with respect to each of these non-GAAP measures presented.

 Comment No. 3

 Revise your disclosures in the press release to eliminate all references to “pro forma” net income, “pro forma” results, “pro forma”
earnings and “pro forma” earnings per share. The information you have presented throughout the press release should be referred to as “non-GAAP” and not “pro forma.” Pro forma has a different meaning as defined by
generally accepted accounting principles and SEC rules that is significantly different than your presentation.

 Response to Comment No. 3

 In its
future earnings releases and filings with the Commission, the Company will use the term “non-GAAP” instead of and without reference to “pro forma” (e.g., Exhibit A attached hereto).

 Comment No. 4

 Your disclosures regarding the reasons for presenting each of these non-GAAP measures appear overly broad considering that companies and
investors may differ as to which items warrant adjustment and what constitutes “operational results.” Further, your disclosure of a general or overall reason for presenting multiple non-GAAP measures does not appear to meet the disclosure
requirements of Item 10(e)(1)(i)(C) and (D). It also does not appear that you have met the “difficult” disclosure burden imposed by Question 9 of the Frequently Asked Questions Regarding the Use of Non-GAAP Financial Measures
(FAQ) in explaining why this measure is useful to investors. For e