Webroot Swaps in New CEO

The anti-spyware specialist hands over the reins to Peter Watkins, a former McAfee executive, who will be tasked with keeping the company healthy in a fiercely competitive security landscape.

Webroot Software announced on Nov. 6 that it has moved Peter Watkins, a former executive at anti-virus maker McAfee, into the job of chief executive.

Watkins, who has been serving on Webroots board of directors since 2004, takes over the CEO role from current chief executive David Moll, who will remain on the Boulder, Colo., companys board. Moll has filled the position of CEO at Webroot since 2002, and is considered one of the driving forces behind the companys rise to the top of the anti-spyware sector.

Before joining Webroot, Watkins served as an executive vice president at McAfee, based in Santa Clara, Calif., where he helped lead the anti-virus companys overseas efforts. One of Watkins top priorities at Webroot will be expanding the companys international presence beyond North America, he said, along with pushing its products further into the enterprise market

Watkins takes over the controls at Webroot at an interesting time in the companys history. After establishing itself as a leader in the market for anti-spyware applications, used to remove programs that attempt to record PC usage data or steal users personal information, the company has seen its products come under increasing pressure from larger rivals.

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Along with competition from its traditional adversaries in the security space, including market leaders Symantec and McAfee, Webroot is also faced with the arrival of onboard anti-spyware technology in Microsofts next-generation Vista operating system, which is slated to launch before the end of November.

While companies including Webroot have publicly questioned how many customers will be willing to hand over security responsibilities to Microsoft, whose Windows operating system has become notorious for its many vulnerabilities, industry analysts have predicted that Vista will have a significant impact on the sales of anti-spyware technologies in particular.

In a move to expand the footprint of its products, Webroot for the first time introduced a set of its applications packaged with other anti-virus tools in October 2006. Through a partnership with security software maker Sophos, based in Abingdon, England, Webroot said it could compete favorably with Symantec and others that have included anti-spyware tools in their integrated security offerings.

Webroot has also been rumored to be considering an IPO (initial public offering), while some industry watchers have labeled the software maker a potential acquisition target for one of its larger rivals. The company, launched in 1999, added $108 million in venture capital in 2005 from Silicon Valley backers including Accel Partners, Mayfield Fund and Technology Crossover Ventures.

However, while Watkins said he has a great deal of experience with mergers and acquisitions from his time at McAfee, where he once served as chief operating officer, Webroot is set on going it alone and fighting for market share against the anti-virus sector leaders and Microsoft, he said.

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Watkins said that with over 3 million customers in the enterprise market and many more in the consumer space, Webroot isnt ready to concede anything to its adversaries at all.

"The big boys have left huge gaping holes in the market for us to exploit, as customers dont want the second- or third-most effective technologies, and we will continue to innovate, which is not Symantec and McAfees business," Watkins said. "Weve already moved beyond the anti-spyware niche with integrated, best-of-breed anti-virus [software], and our customer ranks are growing, not being displaced."

The CEO said consumers and enterprises, and businesses in particular, will not be willing to trust the security tools in Vista to protect their IT networks. As spyware and other types of malicious programs have become even more sophisticated, and are being launched specifically with the intent of stealing money, PC users will not abandon their existing protections in favor of Vista, but rather will buy even more stand-alone security tools, he said.

As an example of how the company can drive demand for its software, Webroot officials pointed to the firms recently announced deal to provide anti-spyware tools for use in Web security appliances sold by IronPort, of San Bruno, Calif.

Security market analysts might be calling for industry consolidation based on Microsofts entry in the space and their belief that anti-virus technologies are becoming increasingly commoditized, but customers will continue to need innovative new security products to best protect themselves, Webroot argued.

"We have millions of users, continued investment, and a lot of momentum, which is what every startup strives for," Watkins said. "There will be plenty of opportunity for us to grow our business as the larger players sit on the sidelines and allow us to innovate; the nature of the threats themselves will keep this a robust market for a number of players beyond those companies."

As Symantec and McAfee move aggressively into risk mitigation and compliance services to expand their businesses and compete in markets where Microsoft does not have a presence, their focus on providing top-of-the-line anti-virus applications will become fragmented, creating additional opportunities for companies that do not take a "Swiss Army" approach to security, Webroot officials said.

However, despite the strength of Webroots existing business, some industry watchers remain unconvinced the software maker will be able to go it alone against its larger rivals.

Encouraging consumers to buy additional anti-spyware products when they already get anti-spyware protection for free in Vista will pose a significant challenge, said Jon Oltsik, an analyst at Enterprise Strategy Group, in Milford, Mass. Enterprise customers are looking for fewer products to deal with, not more, according to Oltsik.

"Anti-spyware was a flash-in-the-pan market thats now a feature. Unfortunately for Webroot, the other providers have more market share, more money and more resources; I think theyre fighting uphill battle for survival that gets steeper every day," Oltsik said. "Enterprise customers are looking for more desktop security features, fewer management consoles to look at and fewer vendors to deal with, and none of that is a good recipe for Webroot to succeed."

The analyst said Microsofts arrival in an already crowded space is going to benefit the larger players and force midtier and smaller security providers to consider selling out while they can.

"Microsoft will take market share from everyone, and it will become a [three-horse race] between Microsoft, Symantec and McAfee. Everyone else loses except for some regional players like F-Secure [in Europe] and Trend Micro [in Asia]," Oltsik said.

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