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The rise of freeware security October 14, 2009

Posted by jonathanpenn in client security.
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Nothing gets a vendor to focus on value to the customer than when you have a big competitor offering their solution free of charge. The rise in freeware is nothing short of astounding: the three big vendors – Avast!, Avira, and AVG – boast nearly 300 million users combined. The great majority of these users are indeed running the free software, but a recent event allows us to put some real dollars on it: AVG recently received over $200m in investment for a less than one-third stake. It’s pretty astounding that a company with what I’d estimate at somewhere around $20-$25 million in revenues (give or take a few million) could have a valuation of over half a billion dollars.

The freeware phenomenon is rightly a major source of anxiety for consumer security vendors, and now that Microsoft offers consumer security software for free, the anxiety should only get worse. The big vendors McAfee, Symantec, and Trend are being forced to justify their premium price. I don’t think the “more is better” approach of loading up suites is going to do it. Given how much of their revenue is from consumer security (about 30% for Symantec and McAfee), this is a challenge they’ll need to solve quickly.

Forrester’s market research indicates that these freeware products are taking a pretty big – and growing – bite out of the market, and their success is not solely due to their price.

The rise of freeware security means that dominating the market through expensive OEM and reseller arrangements is no longer an effective strategy. The big vendors have a lot of market share to defend, but they must look at how to compete head to head rather than seizing the prize de-facto solution that comes with a computer or with an ISP relationship.

Not all freeware solutions are alike, and not all pay products are alike either. Some of these freeware solutions are as good, or even better, than some of the pay version – and vice versa. But freeware raises the question: “When is ‘better’ really better?” Or put another way: “How much better does it need to be to be worth it?”

If there are freeware users out there, what to you like about the product, and what made you switch? Would anyone not use or recommend a product simply because it’s free?

Are there other markets or industries (and I don’t think newspapers offer t quite the right example) that we can look to where we can learn how pay offerings fought off and survived a challenge by free offerings?

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