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Webroot Sees a Chink in Armor at McAfee, Symantec

Webroot Software expects to drive sales of its new spyware/anti-virus solution, released this week, by appealing to VARs fed up with weak renewal margins at the established anti-virus companies. The policy of major security vendors McAfee and Symantec to provide partners with less margin on subscription renewals than initial product sales has left the companies […]

Written By: John Hazard

Nov 1, 2006

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Webroot Software expects to drive sales of its new spyware/anti-virus solution, released this week, by appealing to VARs fed up with weak renewal margins at the established anti-virus companies.

The policy of major security vendors McAfee and Symantec to provide partners with less margin on subscription renewals than initial product sales has left the companies vulnerable to firms like Webroot, Websense, Sophos and others, which now provide a viable alternative for a new sale and a full margin, said David Moll, Webroot’s CEO.

“Loyalty in these companies is shaken,” Moll said. “VARs want to sell what makes money. … Why would they sell a renewal that offers them the chance at a 3 percent margin when they can make a fresh sale and get full margin? That’s a clear gap in [McAfee’s and Symantec’s] strategy, and we and others are going to take advantage of it.”

Once captured, Webroot plans to keep partners on board with full margins for renewals, Moll said.

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McAfee and Symantec declined to discuss their renewal policies for this story.

VARs and analysts agreed that the policy is a weakness for the two vendors, especially with the ascendance of new competitors, but the rigor of swapping systems, at least in the anti-virus market, will protect their dominance.

“It’s an issue with almost every vendor,” said Andrew Plato, president of Anitian Enterprise Security, a Beaverton, Ore.-based security practice. “Vendors don’t reward partners for renewals, and it creates an opportunity for poaching.

“A fair amount of swapping out occurs for that reason alone,” he said. “You can walk in with partner du jour and make more money than selling a renewal. … Some companies sell a new Web filtering solution every year.”

The practice of swapping lends itself to certain technologies, such as firewalls, spyware and Web filtering, more than anti-virus, which touches every desktop and is a more complex transition, said Palange and Richard Stiennon, a security analyst at IT-Harvest.

“The truth in the [anti-virus] market is that most customers [and partners] are already pretty unhappy with their vendor, but they’re too entrenched,” Stiennon said. “There is always an opportunity to swap, and that’s where some firms like Trend [Micro] and Sophos are getting a foothold. The turnover that does occur is not because of price.”

Webroot Sees a Chink in Armor at McAfee, Symantec

John Hazard

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