Microsoft Pulls the Plug on Windows Live OneCare

Microsoft's decision to exit the consumer security space reflects a fundamental shift in the market.

It was news that was easy to miss in the rush of both the holidays and the ongoing upheaval in the global financial markets. Microsoft Corp. late last year announced a surprising reversal in the consumer security space. The company announced it will stop selling Windows Live OneCare in the second half of this year. Microsoft plans to replace that product with a free offering, dubbed "Morro," later this year.

The news doesn't mean Microsoft is completely exiting the security game. In fact, it seems just as intent as ever on competing in the enterprise security segment. More to the point, market watchers say, Microsoft's decision to exit the consumer security space reflects a fundamental shift in the market.

To be sure, write Arabella Hallawell and Neil MacDonald of Gartner Inc., Redmond pulled the plug on Windows Live OneCare in part because of "a failure to attract customers" -- but also because it's enterprise security practice has (against all expectations) proved to be the more successful of the two.

"When Microsoft finally announced its entry into the antivirus … market and released Windows Live OneCare in 2006, many industry observers, including Gartner, expected the company to take consumer market share but have minimal impact in the enterprise market. Yet the reverse has occurred," the duo writes.

"When Microsoft entered the consumer market, the free Internet service provider (ISP) channel was also growing, cementing fears of downward price pressure in the market. However, Microsoft was not able to get significant market share with Windows Live OneCare, while its security rivals Symantec and McAfee continued to migrate users to premium-priced converged offerings, including those with a software-as-a-service component, such as Symantec's Norton 360, a product that now represents over 25 percent of its consumer business."

Nor is that all, as Hallawell and MacDonald note: the market for free antivirus technologies -- such as offerings marketed by AVG and others -- continues to grow, particularly in Europe.

Both of these trends are part a a clear shift in customer buying trends, the Gartner team argues. Consumers are increasingly flocking to security-only vendors at the expense of bigger vendors with irons in several different fires.

"Indeed, the plurality of free offerings in Europe was likely a factor in Microsoft's determination that a free anti-malware product might not create a problem with European antitrust regulations. However, keeping clear of regulators will impact the distribution strategy of Morro -- it will not be included 'in the operating system,' nor do we expect that Microsoft will use Windows Update to distribute the initial installation," the duo points out.

"The U.S. has so far not moved en masse to free offerings, for example. We expect the impact of Morro to be minimal, although the impact may be greater in developing economies, where consumers have more limited brand allegiance to security vendors.

Microsoft's ambitious Forefront security practice -- which develops solutions for conventional client and server environments, next-gen application environments, and the network edge -- will function as a "feeder" of sorts for Morro. "Gartner has seen an uptick in interest in and pilots of Forefront Client Security (FCS), although the number of full production deployments is limited," Hallawell and MacDonald observe.

"We expect growing numbers of small and midsize businesses … and midsize Microsoft-centric enterprises to consider FCS when the next release -- which should include some core improvements in management functionality and feature set -- is delivered [sometime in Q3 of this year]." The salient take away, the duo concludes, is that Microsoft's decision to pull the plug on Windows Live OneCare "should not be interpreted as a lack of commitment to research labs and security products for the enterprise space."

comments powered by Disqus