This weekend’s edition of Barron’s actually stooped to covering the security industry. I have to give the author credit for noticing that this $30 billion market for anti-virus, firewalls, etc. is alive and well. As a matter of fact, security is a bright point in these dismal times on Wall Street. So why is everyone getting tired of “security”?
I think it is the grueling day-to-day struggle that researchers, security practitioners and entrepreneurs have to face. Give me your feedback.(email stiennon at gmail ) I am planning on writing more on this topic. Are you getting tired of the IT security industry?
Barron’s gives McAfee the nod in its article as the more exciting play.
The $30 billion computer-security industry is booming. And it’s unlikely to be slowed much by the current economic downturn. In fact, the two biggest players — Symantec and McAfee — are each on track to boost their earnings by about 15% this year.
The stocks of both companies are well worth a look. Both are reasonably priced and both have fans with compelling arguments. But we have to give the edge to McAfee. The company has a better track record in recent years and, as the smaller of the two, it may well be more nimble.
The author, Ray Palmer, notes that Symantec is not really a security play since its Veritas acquisition, hailed at the time as a good diversification move, overshadows the security division. McAfee, true enough, is all about security.
I am fascinated by McAfee’s introduction of an in-the-cloud update service for virus signatures, dubbed Artemis (Named for the Greek goddess? Artemis is the goddess of the wilderness, the hunt and wild animals, and fertility. ) Instead of the “live update” method where constant virus signature updates are sent to a client, Artemis is a service that stores the signatures in McAfee’s data centers. When the AV client sees a suspicious piece of software it just checks the data base in the cloud for a match. I think this methodology has been well proven by URL filtering services that operate on the same principal.
One aspect of the relationship between McAfee and Symantec was not mentioned by Barron’s. There is a little-known Michigan company called Hilgraeve that successfully sued McAfee for patent infringement based on a claim for scanning files as they are downloaded. When Symantec was also successfully sued by Hilgraeve they just bought the patent for $62.5 million. My understanding is that IBM, Trend, and McAfee all pay royalties to Symantec based on this patent.
So here is the question: Is Artemis a patent breaking move by McAfee to get out from under that onerous requirement to pay Symantec every time they sell their main product?
