A Battle Ahead

By Ryan Naraine  |  Posted 2005-05-20 Print this article Print

Even as Kaspersky Lab stands to gain an indirect benefit, president of the companys U.S. operation Steve Orenberg said preparations are being put in place for a hardnosed battle ahead.

"Microsoft will be a formidable player, but ultimately the customer will decide," Orenberg said, noting that any prediction of major price cuts has to be balanced against the reality that Microsoft depends heavily on the channel to sell the product.

"If they choose to cut prices purely as a competitive strike against McAfee and Symantec, thats entirely possible. They have the resources to absorb the cost of doing that. But Id be hesitant to say we will see big price cuts on the enterprise side."

"On the consumer side, the market will demand lower prices. The consumer market is very price-conscious. But I cant see how they will leave margins for the channel if they price the enterprise product too low," Orenberg argued. "Id be curious to see what theyll be offering to channel partners if they choose to be real aggressive on pricing."

The average street list price for enterprise anti-virus protection falls in the range of $40 per desktop per year. For bigger companies purchasing licenses on a per-seat basis, the price is substantially lower. "I cant see how they can come in around $20 and still leave something on the table for channel partners."

A spokeswoman for Symantec Corp., which markets the dominant Norton brand, declined to comment. "Microsoft has not made a specific announcement around a product or around pricing or guarantees. Theres nothing for us to comment on," she said.

McAfee Inc.s director of product marketing, Steve Crutchfield, said his company will "monitor market conditions" when Microsoft ships its product and react accordingly. "We dont have a strong feeling yet about how theyll price their product, but were always watching Microsoft just like we watch everyone else.

"Our feedback from customers is that theyre not really considering Microsoft for desktop protection in the short to medium term. In the past, customers have been very reluctant to move away from existent solutions, and we dont expect that to change overnight," Crutchfield added.

Even without Microsoft, Crutchfield said the market today is very competitive and noted that current pricing levels have remained steady.

Click here to read more about Symantec joining in on the anti-spyware market. On the issue of Microsoft forcing competitors to offer spyware protection without charging extra, Crutchfield said the additional investment that goes into spyware detection means that businesses must pay extra. High-volume McAfee customers (10,000-plus seats) pay $6.60 per seat for anti-spyware protection. On the lower end, a company with 25 seats pays about $20 per seat.

"That is where well see the biggest change," says Kaspersky Labs Orenberg. "It is inevitable that we will see a shift to all-in-one protection, at the same price," he said, contending that the spyware label is an artificial one specially created to push a new market segment.

"Spyware is something that Kaspersky has always detected and guarded against, at no extra charge. Id say this is one area where Microsoft will force the others to catch up," Orenberg added.

Trend Micro Inc., the other big vendor in the space, plans to treat Microsoft like any other competitor. In an interview, associate VP of corporate business development Punit Minocha acknowledged that Microsoft will be a very capable rival, but he argued that businesses will demand more than just cheap anti-virus protection.

"Price could be a factor. Historically, with Microsoft, thats a fair assumption to make," Minocha said. "But customers with complex network environments will not rush to leave a trusted brand over price. In my mind, you get what you pay for. We have a history of being in anti-virus business for a very long time. We have a knowledge base accumulated over 20 years. In the end, it will boil down to what value the solution brings to the market and what dollar amount the customer attributes to that value."

He said businesses with heterogeneous, non-Windows environs will be skeptical about opting for a Microsoft solution based solely on pricing. "Sure, Microsoft will have success in the market; were not going to discount their presence. But, were not sitting around saying, Oh my, Microsoft is here, what shall we do?" Minocha added.

Another possible tipping point, according to Gartners Pescatore, could come if Microsoft chooses to offer guarantees and service-level agreements on virus infections and signature turnaround times.

Besides Trend Micro, anti-virus vendors have been reluctant to offer service-level agreements because there are no guarantees that the user will apply the required updates. However, because Microsoft makes the software targeted by most viruses and worms, Gartner believes the company needs to go further if it expects to charge for a service that essentially protects its other products.

Microsoft has remained tight-lipped on any details of its enterprise plans, but if virus and spyware protection guarantees are offered to businesses, Kaspersky Labs Orenberg admits it could lead to a major shift.

"Its not something you can realistically put in. You can guarantee the way your updates are handled, but even if you have a 100 percent no-failure record on providing updates, it doesnt mean the consumer will be compliant. We put out updates every hour, but we have no way to ensure the end users apply them. Theres no way to enforce it because theres too much responsibility on the end-user."

Check out eWEEK.coms for the latest security news, reviews and analysis. And for insights on security coverage around the Web, take a look at eWEEK.com Security Center Editor Larry Seltzers Weblog.


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