Price war looms as Microsoft enters security market

Subscription charges likely to drop 10 per cent per year

Tom Sanders in California, vnunet.com 17 Oct 2005

Microsoft's entry into the security market next year will dramatically reduce the price of anti-malware software, according to analyst firm Gartner.

"Price points are likely to drop at least 10 per cent per year after Microsoft's entry," Gartner vice president Neil MacDonald predicted.

The software giant is currently developing two security products for consumers and enterprises.

The OneCare consumer product is presently in beta, while a test version of the enterprise grade Microsoft Client Protection is expected later this year. Release dates for the final products have not been revealed.

While Microsoft has not yet unveiled pricing details for the suites, MacDonald predicted that the products will cost no more than $15 per user per PC.

Current providers of anti-malware applications charge significantly more. Symantec's Norton Internet Security, McAfee's Internet Security Suite and Trend Micro's PC-cillin charge new users $69.99, $69.99 and $49.95 respectively.

Symantec and Trend Micro offer a discount for existing customers renewing their licences, charging $39.99 and $24.95 for an additional 12 months respectively.

Symantec last week raised licence renewal prices for its security products by $5 to $10. In a research note, Merrill Lynch suggested that the price hike was an attempt to gain some last minute additional revenues before Microsoft entered the market.

The price increase could make Symantec as much as $250m in additional revenues, the analysts projected.

Gartner recommended enterprise security buyers to use Microsoft's lower prices to negotiate discounts with their existing vendors, even if they are not considering switching.

Due to antitrust concerns, it is unlikely that Microsoft will bundle its security software with Windows, according to MacDonald.

The analyst also argued that established security vendors do not have too much to fear from Microsoft in the short term. The incumbent vendors have at least a 10-year head start, where Microsoft is only now launching version 1.0 of its products.

For the Redmond giant to become a viable security provider for enterprises, it will need to add products for other software platforms such as Linux.

"[Microsoft] cannot expect to be taken seriously as a security vendor if it supports only Windows platforms and avoids security appliance form factors," said MacDonald.

He added that Microsoft needs to overcome scepticism from customers which could consider its entry into the security arena as a move to cover up the fact that Windows is the weakest link in today's security chain.

Regulators could also limit Microsoft's venture into the market, because the company has an unfair advantage over competitors in knowing about Windows vulnerabilities.

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