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Research firms are predicting gangbuster sales for antivirus software vendors over the next few years.
IDC forecasts the antivirus software market will increase to reach US$4.4 billion by 2007, with significant market share from corporate customers, and customers in North America and Western Europe.
Gateway and mail server applications are expected to comprise nearly 90 percent of this market within the next five years.
However, not all of the additional revenue will come from new virus-wary consumers responding to media headlines about malicious bugs and worms. Some of it will come from price hikes from leading vendors.
Double Digit Increases
Indeed, Symantec (Nasdaq: SYMC), maker of Norton Antivirus and Norton System Works software, recently bumped its annual subscription renewal prices to $20, marking a 33 percent increase over the cost of a year ago. Meanwhile, McAfee has increased subscription renewal prices for its VirusScan from $5 in 2000 to $20 in 2004.
Vendors blame cost hikes on a more dangerous computing environment where spyware and spam are rivaling the threat of Trojan horses.
Why, then, is the price for security suites remaining stable? Renewal costs for Norton Internet Security suite, for example, still costs $30. Could it be fear of Microsoft's (Nasdaq: MSFT) antivirus product that is rumored to be in alpha testing?
Changing Market Dynamics
Rob Enderle, principal analyst for the Enderle Group, told the E-Commerce Times that the market dynamics are changing. Sure, he said, Microsoft will make a major impact on the antivirus market once its product is through beta testing and is officially launched.
In the meantime, McAfee and Symantec are pushing for the old razor/razor blade model, that is, the companies sell you a suite (the razor) and once you are hooked into it they live on the renewals (the blades). That, Enderle said, could be a good strategy in a consumer market that is beginning to welcome comprehensive security programs.
"McAfee and Symantec are going for a very comprehensive approach to virus checking and security," Enderle said, noting that these two players have a stronghold on the market while smaller vendors like Trend Micro (Nasdaq: TMIC) are vying for leftovers.
Perhaps that's why Trend Micro has not raised its prices in the past few years. Enderle said that while the market leaders are moving toward the suite mindset, Trend Micro is focused more on the virus checking aspect of security.
"In the long-run, the firms that can come at this comprehensively are the ones that will probably own segment," Enderle said. "So Trend Micro probably sees that coming and will try to become the low cost provider."
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