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AUGUST 14, 2003
By Alex Salkever Microsoft, Your PC's Security Guard? While struggling to make its own code tighter, the software giant also appears to be readying a line of antivirus and firewall software In January, 2002, Microsoft Chairman Bill Gates declared security to be the new top priority at the world's biggest software maker. In a speech to employees and in a public statement, he declared war on bugs and vowed to shore up product security. Of course, the bugs keep popping up, and serious security vulnerabilities continue to be exploited in Microsoft's ubiquitous operating system and applications. Witness the horrific MSBlaster worm that crashed untold thousands of Windows 2000 and XP machines worldwide during the week of Aug. 11. So how's this for a delicious irony: Microsoft (MSFT ) now appears to be targeting security software products as a new growth opportunity. That's an area where the Colossus of Redmond has previously shown only faint interest, but now savvy observers say the giant is locking in on it. Microsoft won't break out exact figures, however, most estimates say it will derive less than 1% of its estimated 2003 total revenues of $32 billion from security software and related services. This is in a global information-technology security market for hardware, software, and services that's now worth $17 billion and is set to grow at a 15% clip for the foreseeable future, according to John Pescatore, research director at tech consultancy Gartner. And that would seem to be an alluring opportunity for a company so dependent on the slow-growth Windows operating system and Office software suite. Not to mention so unable to build bug-free, unassaultably secure software itself. TELLTALE SIGNS. Mike Nash, the Microsoft vice-president in charge of the security effort, has played coy when asked whether the giant will use its new focus on security to mount a competitive attack on that sector. But now a confluence of signals is pointing to Microsoft's imminent arrival. In June, 2003, it announced the purchase of Romanian antivirus company GeCAD for an undisclosed sum. And details are starting to surface about ongoing Microsoft trials of what appear to be antivirus and personal firewall software that would compete directly with the likes of Symantec (SYMC ), Network Associates (NET ), and Zone Labs, a smaller but quickly growing company in San Francisco. Web surfers have posted screenshots of test versions of the new Microsoft security software at two popular Windows forum sites, Neowin.net and Activewin.com. The screens portray a combination antivirus/personal firewall interface combined with a data backup utility. According to a screenshot posted at Activewin, Microsoft has contacted an unknown number of former beta testers who also had .Net accounts to participate in security trials as part of a program dubbed the "PC Satisfaction Trial." Microsoft won't say whether the trials are happening and declined to comment for this article, but others in the field confirmed that they knew the trials are under way. Microsoft's effort appears to target the consumer market. That it would choose to tackle this segment rather than big corporate installations is no surprise. Security geeks who guard corporate networks remain highly suspicious of Redmond's security chops. An April, 2003, poll by Forrester Research found that 77% of security experts at 35 big companies said Microsoft products remained insecure. Consumers, however, may have a rosier view and might be willing to try out an enhanced Microsoft personal firewall that goes beyond the existing bare-bones version now built into Windows. BIG SPLASH. "The debate is what will the product look like, and how long will it take to get there. And no one has expected it this fast," says Gene Munster, a software analyst at US Bancorp Piper Jaffray. Munster spotted the Web postings and outlined what he believes to be the evidence of Microsoft's security software effort in a July 15 research note. The implications of Microsoft entering the desktop-security market are huge. It could easily integrate more robust security features into Windows. However, it probably wouldn't give security software away unless it wants to face the prospect of another European Union fine, something it's likely to get hit with for its tight bundling of a free copy of Windows Media Player with the Windows operating system. Still, Microsoft jumping into this pool would be like the big kid doing a cannonball in the deep end: It would generate plenty of waves and perhaps a great deal of shouting, too. As it stands now, all the desktop-security software companies, which attempt to secure either individual consumer or corporate PCs, need and generally receive access to Microsoft's secret Windows code to ensure that their products are compatible with the operating system. Still, it stands to reason that Microsoft would enjoy an advantage here because no one knows how to make Windows-compatible products better than Microsoft.
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