Money, Market Share At Root Of Microsoft Security Push

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February 10, 2006 (4:43 PM EST)

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By Gregg Keizer , TechWeb Technology News

Microsoft's entry this week into the consumer security market with its OneCare subscription service is either an attack on rivals or a maneuver to protect its important Windows revenue base, analysts say.

On Tuesday, Microsoft set the price for OneCare, a by-subscription security service that includes a personal firewall, anti-virus scanner, general PC tune-up utilities, and data backup and recovery tools, at $49.95 for a one-year license that covers up to three PCs.

That price point was pegged, more or less, by analysts. In October, for example, Gartner said that the most likely price of OneCare would be $20 per year per machine (which by Microsoft's 3-PC limit, would put it at $60 annually). The Yankee Group was more on the mark; in January, it said the price would be $50 annually (though it didn't predict the multiple-machine license).

"We knew it was going to be at least 20 percent lower than competitors' prices," said John Pescatore, a Gartner research director. "We didn't think they would dump it at a super-duper low price."

Pescatore, and others bet that a bargain basement price was out of the question because of the 2002 antitrust settlement, and the resulting government over watch. Not to mention rivals just waiting to jump on the Redmond, Wash.-based developer for new monopolistic practices.

"Prices for Microsoft’s for-fee security products will walk a fine line," predicted Yankee Group senior analyst Andrew Jaquith in a research note posted in mid-January. "They must be low enough to be competitive, but not so low that they provoke charges of unfair competition from erstwhile security partners."

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