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Microsoft OneCare Security Grabs 15% Market Share


Low pricing helped drive the new consumer security service to second-place market share.



Microsoft parlayed the low price of its OneCare security suite into a 15 percent share of the consumer retail market during its first month on store shelves, enough to place second on the sales chart said a research firm Tuesday.

The Redmond, Wash. developer's first consumer for-a-fee security offering debuted at the end of May; by the end of June, it had grabbed 15.4 percent of retail security suite sales, said the NPD Group.

It was price -- OneCare lists for $49.95 annually as a three-license package, but retails for as little as $19.99 at outlets such as Best Buy and Amazon.com -- that drove it to pinch such a piece of the security pie, said Chris Swenson, director of software industry analysis at NPD.

"The list price of $50 was revolutionary," said Swenson. "That slashed [the current] pricing in half for a security suite. That is just so cheap for a three-license SKU." Comparable bundles from existing security vendors topped $100, he said.

In fact, OneCare's pricing has driven some vendors to blast the giant software maker for using what they call predatory pricing to drive out competitors.

OneCare's low pricing also showed in other NDP data; Microsoft accounted for 8.2 percent of June sales in dollar volume.

Microsoft's new product -- which includes a two-way personal firewall, anti-virus scanning, automated backup, and PC tuning utilities -- hit Symantec's sales the hardest. According to NPD, Symantec's unit share of the consumer suite market dropped from 69.9 percent in May to 59.8 percent in June; its dollar share also fell, from 74.1 percent to 68 percent. The other vendors that sell at retail, including McAfee and Trend Micro, weren't as affected by Microsoft's entry.

"Symantec is still the 800-pound gorilla in the space," Swenson said, and remains the brand to beat. He doubted that Microsoft could supplant Symantec as the leader.

"It's hard for Microsoft to compete on quality. The others, like Symantec and McAfee, have been in the business for a long lime. They have lab operations long in place, and they know what they're doing."

Still, the out-of-the-gate results by Microsoft caught Swenson by surprise. "It's not a given that Microsoft would succeed here," he said. "Look at how they've done in small business accounting software, or in personal finance. They've never really been able to compete with QuickBooks or Quicken."

The shake-up goes beyond sales, Swenson argued.

"By their entry, Microsoft's forced vendors to change," he said. "McAfee, for example, has completely changed its product line. In the end, consumers will benefit."

Both McAfee and retail leader Symantec have reacted to OneCare's move to market. Symantec, for instance, has talked up its subscription-based suite, dubbed Norton 360, while McAfee has debuted four different packages in its new Falcon series.

"We've already seen that when Microsoft entered, the result was innovation in the space, more functionality migrating downstream, and better price performance," said Swenson.

Although Symantec hasn't set a price for Norton 360, nor nailed down a deadline other than to say it might be as late as 2007, McAfee's foursome lists from $39.99 to $79.99.

"A $50 price point is sustainable," said Swenson. "That's an annual subscription price remember, and it's more than the others were getting for their virus definition updates before. But $20? I don't think so."



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