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June 20, 2006

Predatory pricing of Microsoft’s security products?

Posted by David Hunter at 10:05 PM ET.

Jupiter Research’s Joe Wilcox points to a blog posting by Alex Eckelberry of security software vendor Sunbelt Software that crunches the numbers for Microsoft’s Windows Live OneCare and Antigen enterprise security products and concludes that Microsoft practices predatory pricing:

I don’t often write pieces lambasting Microsoft. I have close friends who work for the company (incidentally, some of the brightest people I know), my company is a Gold Partner and we’re also in business with Microsoft. And, I am one of those who believe that the computing world has actually been made a better place by Microsoft.

My beef is never with the people. My beef is with a number of strategic decisions that have been made by the company that should scare a lot of people. So please, to my friends at Microsoft, don’t take this personally. This stuff just needs to be said.

It’s bad enough that Microsoft is getting in to all aspects of security. But now they are going to kill their competition through predatory pricing.

Hit the link for the calculations, but for Windows Live OneCare, his conclusion is that it is “almost 50% below the market leader, and no one has said a peep.” That seems somewhat overheated since the OneCare MSRP of $49.95 for three machines is easily its most notable aspect and has received quite a bit of comment here and and quite a few other places. It’s also overshadowed by the oddities of the delivery mechanism for consumer security products which generally appear as a trial offers preinstalled on new PCs and based on adoption statistics, seem to be mostly ignored.

More telling is his analysis of the pricing for Microsoft’s Antigen enterprise security products:

Now, let’s move to the enterprise side, specifically virus protection for Microsoft Exchange. Remember that enterprise sales are the bread and butter of companies like Symantec and Trend. This is where the money is made.

Examine the latest pricing for Microsoft Antigen, the old Sybari product re-branded under Microsoft’s new Foreforont line of security products.

As we can see here, Microsoft has priced themselves over 60% less than Symantec, an astonishing difference in price. Microsoft has effectively low-balled the entire antivirus industry in one fell swoop. And their product includes five antivirus engines, not just one.

There’s much more there, but here’s a closing thought:

What should be disturbing about of this all is that we very well might see Microsoft owning a majority in the security space. Despite what their PR flacks tell us, they are hell-bent on getting your business. Look at the Forefront website for yourself. These people mean business. Maybe I’m jaded, as I’ve spent most of my career working for companies that got pummeled by Microsoft (Borland, Quarterdeck, etc.).

Stifling innovation? You bet. What venture capitalist will invest in the next great security idea or product? What entrepreneur will start a new company in the security space, given the risks of competing with Microsoft?

And it’s not just startups. For example, after Microsoft announced the acquisition of Giant Company, a senior executive at a major security company told me that they weren’t going to bother coming out with antispyware functionality, since Microsoft had already made that product free. While that company has since changed their mind, it was a chilling conversation.

As I’ve mentioned before in regards to Windows Defender (antispyware), Windows Live Safety Settings, and application transfer applications, there’s no more predatory pricing than free and I can’t help but believe that Microsoft’s heading for another confrontation with antitrust regulators around the world.

Filed under Antigen, Antitrust, Coopetition, Defender, Forefront, General Business, Governmental Relations, Legal, McAfee, Microsoft, OS - Client, Security, Servers, Spyware, Sybari, Symantec, Technologies, Viruses and Worms, Windows Live, Windows Live OneCare Family Safety, Windows Vista

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One Response to “Predatory pricing of Microsoft’s security products?”

  1. Microsoft sweetens the deal for Forefront partners -- Microsoft News Tracker Says:

    [...] As we have mentioned previously, the business security software market is quite lucrative and it certainly doesn’t hurt to have Microsoft branded offerings for Microsoft middleware like Exchange or SharePoint. However, as always, Microsoft’s business sales are driven by partners so apparently it was felt some incentives were in order to get traction for Forefront out of the gate. That being said, this was merely a broadening of the SSA program, which was started earlier in the year, to include the latest Forefront products. Filed under Servers, Partner Program, Microsoft, Forefront [...]

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