[ISN] Microsoft in Quandary Over Virus Security

InfoSec News isn at c4i.org
Tue Feb 22 09:13:40 EST 2005


By Allison Linn
The Associated Press
February 22, 2005

SEATTLE -- If Microsoft Corp. doesn't do more to stem Internet
attacks, the company risks further alienating customers unhappy with
the multitude of threats already facing its ubiquitous software. Sell
its own security products, on the other hand, and Microsoft faces a
potential backlash from some of its allies - the companies that now
provide an extra layer of security for its Windows operating system,
Internet Explorer browser and other products.

With a powerhouse like Microsoft becoming a direct competitor, they
could get squeezed out.

What a quandary.

Last week, Microsoft Chairman Bill Gates confirmed plans to sell
antivirus products to both consumers and big businesses by the end of
the year. But the Redmond company is mum on cost and features.

Speaking at a security conference, Gates also said the company would
give consumers a free tool for combating spyware, a pesky and growing
threat that can monitor users' activities, hinder computer performance
and create other hassles. Microsoft also will sell a more
sophisticated antispyware product to businesses.

Executives in the security industry say they believe Microsoft's
promise to continue sharing security information and working with
other security companies even after it becomes a direct competitor.

Analyst Gregg Moskowitz with Susquehanna Financial Group said both
sides have an incentive to "continue to play nice with each other."

The security companies are dependent on Microsoft to make sure their
defenses run smoothly, while Microsoft cannot risk having competing
security products break down and wreak more havoc on Windows,
Moskowitz said.

"A very significant number of people, if they don't have a good
security experience, they're going to hold it against Microsoft - even
if they're using another vendor," Moskowitz said.

Still, John Schwarz, president and chief operating officer of Symantec
Corp., would rather see Microsoft concentrate on fixing security

"We believe they'd be better off in focusing on making sure that their
platform, the Windows operating system, is less subject to attack,"  
Schwarz said.

Microsoft has worked feverishly to better secure its products,
including updating Windows XP with a new firewall and other security
measures. But given their widespread use, the products are
near-constant targets of attacks that take advantage of loopholes and
flaws to hijack computers, steal personal information and cripple

McAfee Inc. President Gene Hodges calls its new competitor an example
of "capitalism at its best."

But he said it will only be a fair fight if all companies have a level
playing field in which everyone sells, rather than gives away,

Microsoft's move to sell antivirus software appears fair so far,
Hodges said, though he said Microsoft's decision to give away an
antispyware product could hurt smaller players who can't afford such

"We would have rather they entered the market for spyware and
competed," Hodges said.

Security companies including McAfee already sell antispyware products,
generally charging between $30 and $40, though a few give away
versions or trials for free.

Microsoft has downplayed the competitive angle, saying they are simply
responding to requests from customers for more protection options. Amy
Roberts, a director with the company's security and business unit,
said the company is most concerned about people who have no extra
protection at all.

Peter Kuper, an analyst with Morgan Stanley, believes Microsoft is
most interested in protecting its Windows franchise, not finding a new
way to make money.

The security problems are costly and damaging to Microsoft's
reputation, he said, and failure to address the threats could drive
more customers to competing products such as the Mozilla Firefox
browser or Apple Computer Inc.'s Mac OS computers.

"They're not winning the war. They're not winning the battle," Kuper
said. "So Microsoft is saying, `I don't care whether it's free, as
long as it's something. That's better than nothing.'"

Kuper isn't expecting Microsoft to immediately snag much market share
from Symantec, McAfee and others. But he noted that, while Microsoft
may not be looking at security as a big revenue stream, the cash-rich
company could easily afford to undercut its competitors.

Symantec's Schwarz said he worries that Microsoft's clout could also
discourage smaller security companies from entering the market or
staying in it, effectively reducing options for consumers.

Microsoft's prior moves into new markets - including trouncing browser
pioneer Netscape by shipping its Windows systems with Internet
Explorer, now such a common target of Web-based attacks - have gotten
the company in hot water with antitrust regulators in the United
States and Europe. But for now at least, some competitors say they
aren't planning to take this battle to court.

Symantec's Schwarz argues that his company's products will have an
edge, especially with business customers, because they protect more
than just Microsoft products. And McAfee's Hodges said he's confident
his company's reputation will keep customers loyal.

"I'd rather fight Microsoft in the marketplace because we're convinced
we can whip them," Symantec Chief Executive John Thompson said at the
security conference where Gates spoke. "So this is not about showing
up in Washington or whining on someone's doorstep about what Microsoft
can or might do."

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