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More security bang for fewer bucks

By Joris Evers, CNET News.com on August 30, 2006

Summary

After Microsoft's entry into the market, consumer security software has become cheaper and more comprehensive.

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Consumers now are getting more for less of their money when they buy security software.

Microsoft's entry into the consumer security software arena in late May has made PC protection cheaper, according to data from The NPD Group. At the same time, security products are becoming more comprehensive, analysts said.

"Microsoft is really shaking up this whole market in terms of pricing," said NPD analyst Chris Swenson. Moreover, with Windows Live OneCare Microsoft has also challenged the bundling strategy of its competitors, forcing them to add features instead of selling them separately, he said.

Average retail prices for security suites and pc-care packages hit a two-year low in July at US$54.57, and the pricing trend continues downward, according to NPD data compiled late last week. With Microsoft's entry, stalwarts Symantec and McAfee have to beef up their products and will have a tougher time selling them at a premium, analysts said.

The introduction of OneCare heightened the battle for consumers' security dollars. There's a lot at stake. Last year, the worldwide market for consumer antivirus software reached US$1.95 billion, up 17 percent year-over-year, according to research from Gartner. Symantec dominated the space, taking 70 percent of the pie.

So far, OneCare has made a splash. The product held the No. 2 spot in sales of security suites at U.S. stores in June and July, the first two full months that it was available, according NPD data. OneCare is by far the cheapest option, with an average retail price of US$34.02 in July, versus US$60.93 for Symantec's security suite and US$63.24 for McAfee's suite software.

"Microsoft is entering the market with a bang. They are significantly cheaper than their competitors and will gain market share," said Natalie Lambert, an analyst with Forrester Research. "It will bring down pricing, no doubt, and Microsoft has also caused companies such as McAfee to offer multiple tiers of protection."

Microsoft is not always successful when it enters new markets. Intuit, for example, still leads in small-business accounting, a market Microsoft entered last September with its Small Business Accounting Software 2006. However, Microsoft should be taken seriously in security, Swenson said. "I think they got the mix right," he said.

Microsoft's security focus
Often chided for the lack of security in its products, Microsoft has been working for nearly five years to improve its security posture. The company has made several high-profile security hires and with OneCare is now selling a product to secure Windows PCs, an area it previously left to others.

OneCare hit U.S. store shelves in late May, three years after Microsoft announced its intent to move into the antivirus realm. The product combines antivirus, anti-spyware and firewall software with backup features and several tune-up tools for Windows PCs.

In the wake of OneCare's announcement, Symantec and McAfee are both bundling more functionality than ever into their products to make them more appealing.

McAfee earlier this month released a new family of products and for the first time included a safe Web search feature, a firewall, and PC maintenance tools in VirusScan Plus, its most basic variant, with a list price of US$39.99.

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