Symantec and McAfee: One is Going the Wrong Way

In comparing and contrasting their latest quarterly results and earnings forecasts, we find McAfee and Symantec on divergent paths.

McAfee, the smaller of the two security-software stalwarts, is on the better path, going from relative strength to strength and gaining market share on Symantec in enterprise markets, small- and medium-business accounts, and the consumer space.

This isn’t a new development. McAfee has been getting its act together for a while now, whereas Symantec cannot seem to recover from its ill-advised acquisition of Veritas back in 2005. The legacy that former Symantec CEO John Thompason left behind has been more albatross than soaring eagle.

Current Symantec CEO Enrique Salem, who’s been in the security industry a great many years in a number of high-profile roles, probably wishes he could have a do-over. Unfortunately for him, he and his executive team will have to find a way to get an unfocused, unwieldy, and fractious company back on track. He’ll require a large measure of good fortune as well as skill and diplomacy.

The wheels seem to be falling off at Symantec, and the problems cannot all be blamed on a moribund macroeconomy. McAfee is not experiencing the same degree of pain that Symantec is suffering. In every market where the two companies compete head to head, McAfee is getting the better of its larger rival.

Symantec’s losses in enterprise and small- and medium-size businesses (SMBs) are especially troubling. That’s where the company, with its product portfolio, should compete effectively, where it soup-to-nuts security offerings should be packaged and sold as end-to-end solutions. But it’s not happening, and Symantec is failing to get customers to sign long-term licensing deals. Again, McAfee is having more success on that front.

Nobody, especially investors, likes to see one-year deals instead of three-year pacts, and Symantec has a lot of them. When these are reviewed a year from now, they might not be renewed. They could go elsewhere. That customers are willing to make only tentative commitments should concern all Symantec stakeholders. The revenue declines the company has been experiencing have been bad, but they could get worse.

Meanwhile, though Symantec has improved its consumer offerings, that’s not a market for the faint of heart. Freeware and “cheapware” — from a host of vendors, including Microsoft, which finally is owning up to its security obligators to consumers — are thinning already pressured margins. So, even though the consumer space is an area where the company’s fortune are ebbing less distressingly than elsewhere, that situation is likely to worsen with time.

Has Symantec entered desperate times?

You know what they say about desperate times. They call for desperate measures. At some point, perhaps sooner rather than later, Salem might give serious consideration to throwing off the distracting boat anchor of Veritas and the detritus it has accumulated since that dubious acquisition.

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One response to “Symantec and McAfee: One is Going the Wrong Way

  1. One reason that Symantec is not obtaining long term contracts is due to poor management in its support organization that resulted in forcing its enterprise customers to constantly escalate in order to get their software issues resolved.

    Within Symantec’s support organization, customer issues are prioritized not by the number of customers affected or even the severity of the bug, but by who yells the loudest and/or who has the largest contract up for renewal they can use as leverage with sales.

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