Competition between Symantec, McAfee intensifies

We wrote last week that the administration’s cybersecurity policies would benefit commercial cybersecurity vendors (9 July 2009 HSNW). The New York Times’s Ashlee Vance writes that this fact, and the growing consumer awareness regarding computer safety, have made the competition between the two leading makers of computer security software, Symantec and McAfee, even more intense. The stakes are huge: millions of global followers willing to donate a steady sum every year for protection against online threats.

Recently, Vance notes, the competition between the two has become fiercer, as both have tried to get their software tied to more new personal computers, Web sites, and Internet service providers. McAfee has been particularly aggressive, using a string of deals with large PC makers in a bid to usurp Symantec’s leadership position. “It’s like an arms race,” said Albert Pimentel, the chief financial officer of McAfee. Security companies must constantly persuade customers and partners to renew subscriptions or switch from a competitor with similar products.

For years, McAfee served as a self-defeating also-ran, cleaning up the scraps left by Symantec. The company, based in Santa Clara, suffered from a decade of legal and accounting problems that left it in poor competitive shape, and employee morale low. Things have changed in the last two years since David DeWalt left his post as head of sales at the storage company EMC to run McAfee, succeeding George Samenuk, who stepped down in a stock-option backdating scandal. Under DeWalt, the company has expanded well beyond antivirus software, acquired some niche security players and increased sales to consumers and large businesses. McAfee, says Vance, is poised to overtake Symantec next year in sales to the business market if current trends hold.

Symantec, based in Cupertino, California, remains the overall security market leader, with just about double the market share of McAfee, according to the research firm Gartner. In the consumer market, Symantec holds an even larger lead, with 52 percent share and $1.8 billion in revenue last year, compared with 18 percent of the market and $624 million in revenue for McAfee. A host of smaller players like Trend Micro, CA, and Kaspersky Lab round out the field.

“It is really Symantec and the seven dwarfs,” said Enrique Salem, the chief executive of Symantec.

In a bold and somewhat risky bid to raise its stature with consumers, McAfee has tried to win over PC makers by splashing cash around. In the last year,