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In a move that could further unsettle the security software market, Microsoft and others are distributing free antivirus programs
Two years ago, Microsoft rankled computer-security software vendors by jumping into their market (BusinessWeek.com, 6/1/06). Now the company is again creating waves by pulling out of it.
It's not that Microsoft (MSFT) will stop providing security products. But starting next year, the software giant plans to stop selling its OneCare security program, a $50-per-year virus-cleaning service that failed to generate much consumer interest. In its place, Microsoft plans to release a free antivirus program (BusinessWeek.com, 11/19/08) code-named Morro, aimed at squelching more of the malicious software that infects Windows PCs and tarnishes Microsoft's brand. "We're trying to get [protection to] the 60-odd percent of the people who don't have anti-malware," says Amy Barzdukas, a senior product management director at Microsoft.
Free Programs Gain Popularity
For a growing number of consumers, "free" has become the new watchword in PC security—just as it has in other software categories, from e-mail to word processing. AVG Technologies , a Dutch company that's expanding in North America, claims 80 million users of its software, and on Dec. 3 launched the Spanish-language version of its program. Comodo, a New Jersey maker of data encryption software, is stepping up marketing of its free desktop security suite, which it says 15 million users have downloaded. Vendors including Avira and Clam AntiVirus also give away programs. Now it's Microsoft's turn. "Everybody is concerned about anti-malware, and practically no one wants to pay for it," says Roger Kay, founder and president of industry consultant Endpoint Technologies Associates, which consulted for Microsoft on its security strategy.
Free security software offers the opportunity for technologically advanced PC users to save money by cobbling together the programs needed to protect their machines, rather than paying $40, $50, or more each year to Symantec (SYMC), McAfee (MFE), Trend Micro (TMICY), or other makers of Internet security software. "AVG is the product of choice for technically savvy people," says Richard Stiennon, chief research analyst at consultant IT-Harvest.
The free programs' popularity is also a response to what many users see as feature-bloated programs from larger vendors that slow computer performance. They're already starting to take share in emerging markets like China, Brazil, and parts of Europe, and could push down prices in the U.S., say vendors and analysts. That's a concern to vendors in the market for consumer PC security software, which researcher Gartner (IT) predicts will grow 15% in 2008, to $2.9 billion. "We can not fight the war against malware with security products being a luxury," says Comodo CEO Melih Abdulhayoglu.
Threats on social networks, too
The big security software publishers argue that free antivirus and antispyware programs don't represent the state of the art in PC protection because they largely focus on e-mail-borne viruses while neglecting threats that emanate from the Web. Most of today's home computer ailments don't come from e-mail; they're contracted by users who visit malicious Web sites or download files from them. On Dec. 4 reports surfaced of a virus on social networking site Facebook that tries to trick users into downloading malicious code. Free security software products "don't really address today's threats," says Todd Gebhart, an executive vice-president at McAfee.
John Pescatore, an analyst at market research company Gartner, says Morro and other free products may be adequate for some consumers, but don't provide comprehensive protection. "The threats have moved way beyond what antivirus software can provide," he says.
For a reasonable annual fee, security software vendors argue, consumers can get everything they need to stay safe online, including defenses against spyware, phishing attacks, and malicious Web sites, plus controls for parents over where their kids surf. "Customers are pretty smart about free," says Janice Chaffin , group president of Symantec's consumer business, which includes its popular Norton line. "Why would you take something free that's less protection than you need?"
Rising competition, falling prices
Symantec, McAfee, and Trend Micro garner much of their business from loading trial versions of their programs on new PCs from Hewlett-Packard (HPQ), Dell (DELL), and others. AVG, Comodo, and some other vendors give away basic antivirus capabilities, then try to sell users on buying paid versions with greater capabilities.
The big security publishers are responding to user complaints by taking steps to make their software less taxing on a machine's power (BusinessWeek.com, 8/7/08). But the rise of free security software presents a troubling trend just when security software prices are falling—including discounts of 20%, 30%, or more since Thanksgiving. "Everything seems to be on sale," says Carol Carpenter, a vice-president at Trend Micro.
Now, the small vendors themselves are threatened by Microsoft's plans for Morro. "You have the giant in the room coming in and giving it away for free," says AVG spokeswoman Siobhan MacDermott.
Morro: fewer features than OneCare
The idea behind Morro is to batten down Windows by getting more PC users to deploy antivirus and antispyware software, thereby stemming the tide of attacks that mar Microsoft's brand. OneCare never gained much market share; sales represented less than 1% of the home PC antivirus software market in 2007, according to Gartner. "It was a market Microsoft didn't understand very well," says analyst Pescatore.
Morro will have fewer capabilities than OneCare, which included software to back up files and perform PC maintenance. But it's also being designed to run smoothly on the stripped-down and increasingly popular laptop machines (BusinessWeek.com, 11/18/08) known as netbooks, as well as less capable PCs sold in emerging markets. Microsoft hopes in part to blunt Apple's (AAPL) argument that consumers should switch from PCs to Macs to avoid viruses, says Endpoint's Kay.
For consumers, the decision to stop paying for security software and download a free product may depend on their tolerance for risk. The freebies suit more sophisticated users—often above the age of 30—with conservative Web-surfing habits, says Chris Christiansen, an analyst at market researcher IDC (IDC). "They're not going to weird places; they're not downloading weird crap," he says. "They're paranoid." For PC users of all stripes, fear may be the best defense of all.
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