Thought for the day: All roads lead to Romania

Microsoft's move into the antivirus market may not be all bad news for businesses, says Simon Moores.

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Microsoft's move into the antivirus market may not be all bad news for businesses, says Simon Moores.





The large antivirus software suppliers put on a brave face when they heard the news that Microsoft is to acquire GeCAD Software, a relatively obscure antivirus company in Romania.

It would, however, be hard to find any sensible business that would welcome Microsoft’s appearance as a competitor in the global antivirus software market which, according to Gartner, was worth $1.1bn in 2001, and growing at a steady 11%, far better than just about any other technology sector.

The writing has been on the wall for some time, and this is why, at least in principle, this strategy shift on the part of Microsoft might be a good thing.

Last month Gartner released a study which said that 2003 will be the first year in history in which most industries will spend 5% of their IT budgets on security, and spending in this sector will have grown at a compound annual rate of 28% between 2001 and the end of 2003. In the same period, IT budgets will have grown overall by only 6%.

When a commodity becomes a necessity, prices invariably rise until in an open market. Competition creates equilibrium. As with the gas and electricity industries in this country, consolidation is frequently the enemy of competition because, as an industry is reduced to a handful of players, prices are inclined to rise over time. The same can be said of the software industry where the total cost of ownership of security appears to be climbing steadily.

Microsoft has entered the antivirus business because, as part of its trustworthy computing strategy, it wishes to have greater control of the process which allows it to respond to viral threats.

At present, it relies on partners who are granted to Microsoft APIs (application program interfaces), but there is a strong argument in favour of building the overall security response into the likes of Windows Update to improve the speed of the company’s response to any new virus signature.

In other words, this is primarily an architectural and management decision where Microsoft, which has recognised that historically it is part of the problem, now attempts to become part of the solution.

Antivirus is, of course, only one part of the security puzzle and in Windows XP, Microsoft already offers basic personal firewall functionality.

Knowing Microsoft’s thirst for "innovation", we can reasonably expect further "mission creep" and the company is already preparing the way with privacy, PKI and Digital Rights Management (DRM) technologies.

Finally, .net requires strong security architecture if Microsoft’s web services vision is to succeed, so I think we can agree that more acquisitions and investments in the security space are likely in the near term.

Why then, is this likely to benefit the customer? Two reasons spring immediately to mind.

The first of these lies in the potential for better management of the virus threat, directly from Microsoft. That’s not to say that the other antivirus suppliers don’t do a great job, but having its own antivirus division places a much greater emphasis and responsibility on Microsoft to deal with the problem in a faster, smarter and better way than it has done in the past.

Second, there’s cost and the total cost of ownership argument.

Microsoft should make its antivirus service free, I hear you say. After all, it if wasn’t for the weakness in Microsoft’s architecture, then business wouldn’t have had to spend billions over the past decade.

Unfortunately "free", while attractive to everyone from a total cost of ownership perspective, is unlikely to be an option. Even if Microsoft wished to make up for its past record by seamlessly including anti-virus into Windows Update, I doubt it could.

The European Commission is already investigating the bundling of Windows Media Player as an allegedly "anticompetitive" move and while I doubt that users are complaining too much over the extra functionality, bundling anything for free would attract the unwelcome and expensive attention of competition legislation on both sides of the Atlantic.

So free is out of the question, at least for now. This means that Microsoft will have to compete with the other security suppliers: a thought, which on the surface, appears to leave them collectively unconcerned.

What I think will happen is that Microsoft will offer its own solutions at a competitive pricing level which will force other companies either to drive down their own charges or look elsewhere for business opportunities.

I don’t sense that Microsoft sees antivirus as a cash cow to be milked and instead, when you factor in the added features of Windows Server 2003, which include better terminal services and a more secure environment, Microsoft appears to be improving the overall total cost of ownership proposition in its latest products.

In the end, this could be good news for business and a grave problem for the weaker two of the top four security suppliers.

What do you think?

Will Microsoft's move into the antivirus market be good for business?  Tell us in an e-mail >> reserves the right to edit and publish answers on the website. Please state if your answer is not for publication.

Setting the world to rights with the collected thoughts and opinions of leading industry analyst Dr Simon Moores of Zentelligence.

Acting globally, Zentelligence (Research) advises governments, suppliers, business and the media on the evolution, application and delivery of leading-edge technologies and specialises in the areas of eGovernment and information security.

For further information on Zentelligence and its research, presentation and analyst services visit

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