Seeking Alpha
Research analyst, long/short equity, tech
Profile| Send Message|
( followers)  

Microsoft's (NASDAQ:MSFT) Security Essentials is a free antivirus program that received more than 2.5 million downloads the first two weeks after its October 2009 launch. Effective free antivirus software is a risk primarily to Symantec's (NASDAQ:SYMC) consumer business (Norton Antivirus) which has more than 50% market share in the $3.5 billion consumer antivirus software market and accounts for about 30% of Symantec's stock value.



To date, Microsoft has not been pursuing the antivirus market aggressively and has indicated that its Security Essentials was geared towards the 50-60% of PC users worldwide that have not and are not likely to purchase antivirus protection. Despite this, keep an eye out for two indicators that Microsoft's intentions may be changing:

1 - More marketing of Security Essentials

Security Essentials has not been marketed significantly to date. The software doesn't even appear amongst the top or sponsored "antivirus" search results on Microsoft's Bing search engine.

2 - Bundling with Windows

With free antivirus software, Microsoft is trying to improve the security of its Windows operating system which suffers from more viruses and malware than competing operating systems like Linux and Apple's OS X. This could lead Microsoft to bundle the antivirus software with Windows the way it has bundled other software (e.g. its Internet Explorer browser) in the past.

Microsoft does have a
partner program for PC makers (Dell (NASDAQ:DELL), HP (NYSE:HPQ), Toshiba (OTCPK:TOSBF) to pre-install Security Essentials in new Windows PCs being sold but there have been no significant partner announcements to date. Partnerships with PC makers would be a major step towards a bundled antivirus offering.

Disclosure: No positions

Source: Can Microsoft Use 'Free' to Kill Symantec's Norton Antivirus?