Are Symantec and McAfee Doomed?

Microsoft (Nasdaq: MSFT  ) is getting serious about security. Finally.

Mr. Softy yesterday introduced Security Essentials, free software designed to protect Windows users from viruses, spyware, and other malware. "It's easy to tell if your PC is secure -- when you're green, you're good. It's that simple," Microsoft says at its download page for Security Essentials.

If you're thinking that sounds a lot like what Symantec (Nasdaq: SYMC  ) , McAfee (NYSE: MFE  ) , and Trend Micro already offer, you aren't alone. Blogger Dave Hunter mocked those who dismiss Security Essentials as too lightweight to command a premium:

That may well be classified as whistling past the graveyard since very little trumps free and if Windows Security Essentials is as good as the beta reviews indicated, the security vendors may have a real problem. I'm still waiting for one or more of them to drop a dime to the antitrust regulators in the US or EU.

Ouch.

But he's right: Microsoft's competitors tend to run to regulators when a threat surfaces. Look at the browser market. Both Opera Software and Google (Nasdaq: GOOG  ) have complained to the European Union about Internet Explorer.

Symantec and McAfee probably have less to worry about, if only because both long ago diversified beyond PC security. McAfee bought Secure Computing last year, adding heft to its portfolio of tools for locking down networks. Symantec competes with EMC (NYSE: EMC  ) and Hewlett-Packard (NYSE: HPQ  ) in storage and data backup, thanks to its acquisition of Veritas five years ago.

Still, we shouldn't discount the importance of PC security. Gartner estimates that security software vendors collected roughly $12 billion in 2008 revenue. Symantec had the largest share with 22% of the market. Microsoft managed 2.3%, thanks to its OneCare package that few considered a reasonable substitute for what Symantec and McAfee offer.

That's no longer true, early reviews are positive, and Microsoft is offering a free solution this time. Now, Mr. Softy is playing at the major league level -- and you can bet that he's playing to win.

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Fool contributor Tim Beyers had stock and options positions in Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy is on lockdown today. Fortunately, it's just a drill.


Read/Post Comments (7) | Recommend This Article (1)

Comments from our Foolish Readers

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  • Report this Comment On September 30, 2009, at 1:28 PM, jimmydont wrote:

    I can't see how you can go anti-trust on something that's

    1. free

    2. not built into Windows

    3. offered as one of a set of free alternatives

    4. something that people have been complaining forever is not included

    If there is a leg to stand on in that sense I'd like to understand what it is.

    Interesting take on the announcement (personally I haven't used anything but the free AVG, and most recently before MSE, nothing, for quite some time.)

  • Report this Comment On September 30, 2009, at 2:31 PM, businessborg wrote:

    What I don't understand is how Microsoft accounts for this.

    You have a feature with a fairmarket value that they are giving to all customers free of charge. Under normal accounting rules this would cause havoc to revenue recognition.

    This is different from the browser wars where they never charged for the functionality. They set the fairmarket value with onecare charging for it, they need to account for that somehow in the sale of the operating system.

    Could that mean that if they were forced to provide an unbundled version that the pricing would have to be adjusted to take off the fairmarket value of AV?

  • Report this Comment On September 30, 2009, at 3:22 PM, avdude15 wrote:

    1. Microsoft Security Essentials just scans for viruses and other malware

    2. This means is matches against Norton AntiVirus and McAfee AntiVirus - these are the products that are threatened by MSE

    3. Most of Symantec's and McAfee's consumer revenues come from their internet security suites - premium products that do much more than just scan for malicious code - they detect intruders, block port scans, detect attempts to exploit software vulnerabilities on your computer, block infected and fake web sites, tell you when you google returns infected web sites when you search . . . .

    4. Users who just want basic protection might go to MSE - but most McAfee and Symantec users opt for the premium suites.

    5. Microsoft isn't paying Dell, HP and other manufacturers to pre-load MSE - McAfee and Symantec are - which gives them a steady stream of new customers

    6. Tech Benches are Best Buy and other retailers won't be installing MSE - they don't get paid for installing free software.

    Point is, MSE will lower margins on stand alone av products and my stress profits, but it does not threaten Symantec or McAfee's business.

  • Report this Comment On September 30, 2009, at 3:30 PM, jimmydont wrote:

    I used symantec for some time, but behind a home router w/ stealthing, properly configured firewall, windows firewall, MSE and Windows 7 x64 I don't see any reason to pay more and lose more system resources. (Although I hear the latest symantec has done a good job at cutting down on resource usage.)

  • Report this Comment On September 30, 2009, at 7:10 PM, SecurityDude wrote:

    All AV scanners are not equal. Recent test showed that the better scanners (2 of them, one of which was Symantec which I use.) caught 90% of the viruses. Most were below 70% and many below 50%.

    Free is good if it works as good as the ones you pay for.

    And believe this, Microsoft will only offer it for free until they get enough suckers on the line, then they will charge.

  • Report this Comment On October 03, 2009, at 12:05 PM, mcdocs wrote:

    After trying a number of other security suites, including those mentioned, I tried Live OneCare. It was the first security suite that was totally compatible and that did not in some way slow my system down, and I have been extremely pleased with it. If Microsoft's new security software performs as well, I will not mind paying for it.

  • Report this Comment On October 06, 2009, at 12:57 PM, Fool wrote:

    As always you get what you pay for. If you get a free security product you are getting crap. I don't care what Microsoft is promising. The level of dedication, expertise, experience and resources a company has to have to truly provide solid security is not something Microsoft has ever even remotely committed to. Anyone foolish enough to rely on this will find out soon enough that it makes no sense to count on the company known for massive and frequent vulnerabilities to be their security provider.

    How much does it cost to buy a new computer? How much does it cost to have your system cleaned up by professionals? How important is it to protect secure information? That's easily worth $50-$70 a year.

    Just got Norton Internet Security 2010...super small footprint and Symantec always has great security.

    Don't buy the hype. Microsoft is the fox guarding the hen house.

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