Security: Symantec vs. Microsoft. Round One: Symantec

Magazine News Story/ Aug 14, 2006


When Microsoft released its desktop antivirus and data backup package, Windows Live OneCare, many figured traditional security players like Symantec and McAfee would be quashed. Three months later, the numbers indicate otherwise.

Far from hurt, the market leaders saw sales grow after OneCare hit retail shelves across the United States. In its quarterly financial results delivered on July 27, Symantec said its consumer antivirus business posted 5 percent sequential revenue growth, and that revenues of its flagship Norton Internet Security product grew 47 percent compared to the same period last year. The next day, Symantec rival McAfee said its packaged consumer software division grew 2 percent in the last quarter while revenue from online consumer services grew 7 percent.

The desktop antivirus and anti-spyware business is a huge and growing market. Gartner projects 2005 revenues of $4 billion will grow another 13.5 percent this year.

When Microsoft announced plans to enter the consumer security business last year, Wall Street made dire predictions for Symantec and McAfee. Given their latest earnings, the doomsayers may want to recast their opinions. “The fact that OneCare didn’t have an immediate impact on consumer sales lends credence to the idea that companies like Symantec are doing pretty fine,” says Richard Stiennon, founder of consulting firm IT Harvest.

OneCare received some bad reviews since its release on May 31, Mr. Stiennon notes, and Symantec CEO John Thompson wouldn’t let that opportunity slip by. “Independent reviews have put Norton Internet Security well above everyone else, and particularly strong against OneCare,” Mr. Thompson said during a call with analysts.

Of course, Microsoft has hardly been knocked out of the park. And Symantec and McAfee are both grappling with internal issues that could take their eye off the ball, if not derail growth. On August 1, Symantec Chief Technology Officer Ajei Gopal left the company to join Computer Associates. He follows a long line of executives who have exited in the last year, including the chief financial officer, chief information officer, and chief operating officer. Meanwhile, McAfee has said it will likely restate past financial results because of a review into its stock option grant practices.

While these industry veterans tend to internal matters, Microsoft might spend its time on improving OneCare, though inferior offerings haven’t stopped it from dominating many markets in the past.