Symantec (NASDAQ:SYMC) lost about 2% market share in 2009 to its competitor McAfee (NYSE:MFE) within the market for business security software. We have updated the Trefis price estimate for Symantec’s stock from $25.24 to $23.82 (versus a market price of $17), in part to incorporate lower than expected future market share for Symantec within the security software market for businesses.
Below we explain why the business-focused security software market is significant for Symantec, why the company lost market share to McAfee and why we expect Symantec to regain some business security market share going forward.
Business Security Software 17% of Symantec’s Stock
Symantec provides security software to both consumers and businesses that help them block malicious software and spam emails, as well as provide protection from phishing programs. We estimate that the part of Symantec’s business that focuses on security software for businesses constitutes about 17% of Symantec’s stock.
Symantec’s security software is used by businesses for protection against malware and spam, as well as avoiding leakage of confidential information.
McAfee’s SaaS Offering Wins it Market Share in 2009
Symantec’s market share in the business security software segment dropped to about 30% in 2009, down from about 32% in 2008. This loss is attributable to McAfee’s push into security software-as-a-service (SaaS) with the acquisition of MXLogic, through which it provides e-mail security, web security and archiving solutions over the cloud.
McAfee also continued to expand its Data Loss Prevention offering, which is considered critical to business customers as it protects the data inside PCs, laptops, mobile phones, USB drives and PDAs through powerful encryption and authentication processes. This sub-segment of the enterprise security market has seen double digit growth over the last few years.
Symantec Expected to Regain Some Market Share
We believe Symantec’s market share losses will not continue. Unlike competitors that mainly offer specialized products, Symantec offers customers a complete bundled security software package. This provides Symantec an advantage because it can attract customers that want a simple, integrated solution that avoids some of the integration issues associated with disparate products.
We believe Symantec will be able to continue winning large security deals from the federal government and the financial services vertical. For example, Symantec recently signed a multi-year contract with Barclays (NYSE:BCS), a global leader in banking and asset management, for its Enterprise Security suite. We believe that such wins will help Symantec maintain its market share in the future.
We expect Symantec’s Share in Security Software for Businesses Market to reach nearly 31% by the end of Trefis forecast period. You can modify our forecast here to see how Symantec’s stock would be impacted if share losses were to continue rather than the slight recovery of market share that we forecast.
Disclosure: No positions