Can Symantec Blame Microsoft?
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If Symantec is to be believed, consumers and small businesses are slowing security software purchases. Is Microsoft a factor and is there opportunity for the company to snatch new customers? |
The answers aren't easily discerned because of intangibles that analysts can't measure with confidence. Consumers and small businesses aren't necessarily aware what security software they have or how up to date it is. For example, when working as an analyst, I observed a startling trend regarding consumers and firewall software. More than one third of Windows XP users said they had none; it's built into the operating system.
Additionally, in the United States, major retail analyst firm NPD measures channel sales but doesn't have data on direct, digital renewals, which account for 40 percent to 50 percent of total security software sales.
What can be assessed, at least in the U.S. retail market, which also contradicts Symantec's position:
- Security software sales are way up, in the double digits.
- Symantec is the biggest benefactor of sales increases.
- Microsoft's Windows Live OneCare market share is insignificant compared to Symantec's.
These indicators suggest that consumers and small businesses are not curbing security software spending and that Microsoft isn't much of a factor. That said, the obvious conclusion isn't always the right one.
"U.S. retail dollar volume for security softwaresecurity suites, antivirus, anti-spyware, firewall, etc.is up 17 percent year over year," said Chris Swenson, NPD's director of Software Industry Analysis. "We're having a great year for security software so far."

The compound annual growth rate, from 2000 to 2006, "for security software was 29 percent in terms of dollar growth," Swenson said. By comparison, "for all of PC software, it was -0.5 percent. Security software went from 3.1 percent of total PC software dollar sales in 2000, up to 14.5 percent in 2006."
He emphasized, "Symantec is the biggest benefactor of the trend. The long-term story is in their favor."
Symantec is likely seeing sales softness from two sources: Increased competition from other security developers and diminished renewals from free software offersand there Windows Live OneCare may be an unnoticed influencer.
"Symantec has never had as much software competition as they have now," Swenson said. The channel contributes to that competition. Best Buy's Geek Squad now accounts for 20 percent to 25 percent of security software purchases people make through the retail channel. Geek Squad almost exclusively distributes Trend Micro and Webroot security products.
"Trend Micro and Webroot are on Best Buy's shortlist," Swenson explained. Typically, Geek Squad technicians will remove whatever other security software that might be on the customer's machine, he said. The practice particularly hurts Symantec, which has the most OEM pre-installations and, presumably, subscription relationships with PC owners. As such, Symantec could take a hit on new subscriptions and renewals.
Assuming that Symantec is right about soft security software spending, Geek Squad shows opportunity for other channel partners and software developers. Repair services is not a typically large distribution channel for security software, but it's one software developers and VARs should give more attention.
The other factor likely hurting Symantecand also tough to measureis the impact of free offers. AVG gives away free antivirus and anti-spyware software. Microsoft's Windows Live OneCare has been available in near perpetual beta. While the 1.5 version costs about $50 at retail for three licenses, version 2.0 beta is free for about 180 days before activation.
Free offers almost certainly impact "renewals" of subscription products like Norton AntiVirus, Swenson said. AVG and Microsoft have embarked on strategies for gaining market share. The challenge will be how to convert free downloads into paying subscribers.
As for Symantec, its consumer and small business sales softness is more likely the result of competition than a decline in security software spending. Caveat: NPD doesn't measure subscription renewals, which could be down for economic reasonsand also the aforementioned competitive factors.


Comments (14)
Why is the VCSY/Microsoft lawsuit being hushed at every corner?
Did you know that the Yahoo/VCSY site removed the VCSY/Microsoft lawsuit link?
Also I find it strange that Yahoo won't let the link to the Yahoo/VCSY page post on the Yahoo messageboards.(Try it if you don't believe me!)
http://finance.yahoo.com/q?s=VCSY.OB
Posted by I-Man | October 26, 2007 2:51 PM
Joe, it does not surprise me that Symantec feels threatened. I have been a loyal customer for 10 years. For many years they had a good product and were diligent in virus updating, however I find, more recently, they have become aloof in servicing the end-user. RTSCAN and CONDUIT can be resource hogs. I am still puzzled over why they decided to leave the Security Appliance business as that seems to be where the market is heading. It just doesn't end with their AV products though, they bought Partition Magic which was a great product and have done virtually nothing with it since. Last year they released pcAnywhere 12.0 which does not work with Vista, ok so they release 12.1 which does, but then they want to charge the full upgrade price to licensed users of 12.0, in that case they should have called 12.1, 13.0. I am hoping that their new Security enterprise product, Symantec Endpoint Protection, pulls through, otherwise I will be looking for another vendor.
Posted by Don Irvine | October 26, 2007 2:52 PM
Symantec has caused its own problems. It has taken a marketing approach in the short-run to increase profits while, as you noted, the space is changing to more competition. They gave up share for pricing/customer service profitability. This has an impact which is now showing up. Personally, I'm grateful for their mistakes and allowing competition to flourish.
Posted by FXP | October 26, 2007 3:33 PM
Symantec has caused its own problems. It has taken a marketing approach in the short-run to increase profits while, as you noted, the space is changing to more competition. They gave up share for pricing/customer service profitability. This has an impact which is now showing up. Personally, I'm grateful for their mistakes and allowing competition to flourish.
Posted by FXP | October 26, 2007 3:34 PM
Symantec can blame itself. Their products are just a bloated mess. I used to religiously buy their stuff happily. Upgrading every year.
Now their AV and Internet Security packages are so bloated they actually slow my system down. And when I would get AV "patches", the machine would have to reboot. Compared with all the Windows Updates rebooting, it just wasn't worth it.
Now I have AVG and Zone Alarm and am quite happy. As long as they don't pull a "Norton", I'll stick with them.
Posted by Tom | October 26, 2007 4:08 PM
I think what we're seeing is a commoditization of antivirus software. There are some great alternatives to Symantec, and many of these are less intruisive and cheaper. The two keys will be the corporate licenses and the PC makers that bundle Symantec with new PCs.
At the same time, perhaps some of the woes of Symantec could be traced to the slow adoption of Vista and the growth of the Mac platforms?
Posted by Greg | October 26, 2007 4:17 PM
What ever happened to Peter it was better before Symantec bought it and only went down hill from there. Seventeen years later we now have more bloatware. Peter taught me assembly language, what was that book. When you where done with the step by step book you had a simple sector editor written in assembly. Thanx Peter.
en.wikipedia.org/wiki/Peter_Norton
Posted by anonimo | October 26, 2007 5:05 PM
Norton Ultilities back in the MSDOS days, it was simply the best. But somewhere along the Windows line, Norton and perhaps also McAfee, seemed to almost become like the viruses in windows computers, that they were supposed to protect it from. In that they used up all the computer resources making a powerful computer run like a snail, and became a nightmare to uninstall. Believe that Norton, like M$ today, had lost site of the computer user and was hooked on their own bit of lock in. The lock in was it was so hard to uninstall, at least some versions, for the average user.
So is M$ hurting companies like Norton and McAffee with its OneCare antivirus? Yes. Because OneCare caters to people who just buy it, instead of looking for a good solution. By good solution I mean free antivirus software that do not grind your windows computer to a crawl, or miss so many viri like OnceCare and Norton.
Posted by chips | October 26, 2007 7:09 PM
Bruce Schneier discussed this issue a while back. Basically, in a market where customers have less information than the vendors, they end up gravitating towards mediocre products, and this effect is well observed in the market for security software.
The only answer is to give the customers access to all the available information--which can only be done with open-source products.
Posted by Lawrence D'Oliveiro | October 26, 2007 8:29 PM
Greg wrote "some of the woes of Symantec could be traced to the slow adoption of Vista and the growth of the Mac platforms?"
That might be some of the most hilarious spin I've read lately. 1)Growth of Mac platform is negligible relative to nearly everything else. 2) If anything slow adoption of Vista would HELP Symantec, because users are maintaining less secure systems.
Symantec's bloat and intractable upgrade procedures (not to mention their Chinese version deleting system files and making the host platforms unbootable). With AVG and Avast providing free/cheap, reliable services, Symantec is doubly screwed.
Posted by Mike | October 27, 2007 1:22 PM
"ClamWin is a Free Antivirus program for Microsoft Windows 98/Me/2000/XP and 2003"
Posted by n0neXn0ne | October 27, 2007 2:03 PM
Symantec, McAfee, and other commerical security firms that write antivirus solutions, are now if the gunsights of the Microsoft corporations. Meaning that MS, in order to grow must use the power of its lock in, and monopoly to expand its offerings to other profitable software areas.
Since MS already sort of owns the commercial Office Suite area, this only leaves the areas where Adobe commands market share, games, and of course security, which will be mostly antivirus software.
The problem for Symantec and other commerical products, is that MS likes to break their software, with every new release of Windows, and even sometimes the service packs. This is at least by design, and is called lock in. While I would not lose any sleep with the disappearance of Symantec products due to future MS lock in, it does prose one problem. In that if MS gets away with that, they will not draw the line on breaking free antivirus programs as well.
And of course, we already see that MS is a producers of games, and competes in that market. Adobe, there are MS competing products for most products that Adobe makes. Silverlight being the newest kid on the block by MS to compete with Adobe Flash.
If you have a sucessfull software product that runs on MS Windows, at some point MS will get around to making an MS one. And there lock in when they use it, can many times beat a superior product. If not that, MS will give it away with the OS, to kill off the competition, and later on charge for it. Office and Internet Explorer being two past examples. At least with community Linux, each company that sells commerical software for Linux, is on an equal playing field.
Posted by chips | October 29, 2007 5:37 PM
I bought Norton Internet Security 2008, because it was a PC Magazine Editor's Choice. As for performance, it works just fine on my 2002 computer with only 512MB of memory. It's also a very quiet program, that doesn't annoy the user with worthless pop-ups.
Symantec needed increased competition, to give them an incentive to "debloat" their software, and otherwise improve it.
Posted by TomT | October 30, 2007 11:03 AM
I have to agree with "anonimo", Symantec has done nothing but screw up good products everytime you turn around. I moved my customers away from Norton AV anything because of the the "Bloatware" factor and moved them to Symantec SB AV because it didn't have the slowness or overhead of the consumer products. Now "Endpoint" is nothing more than a new Internet Security that blocks everything. Since the 2005 version can you even
customize or trust it to do anything but screwup. I have been a loyal customer and reseller since 1985, when Peter Norton still owned the company. Then the products were to the point and worked, you could bank on them. I don't know if anything with their name on it is even worth considering. I guess they will mess up a great backup software (BE) too.......
Posted by sward | November 20, 2007 10:28 AM