The Computer Security Industry

Paper Summary:

This paper explains that the computer security software, which is a sector within the systems software industry, is relatively robust even in this economic downturn. The author analyzes the computer security industry by reviewing the external environment and the strategic groups, by using a six-segment analysis and a Porter's five forces analysis and by an extensive firm analysis comparing Symantec versus McAfee. The paper concludes that McAfee has been better able to build new products and to operate more efficiently than Symantec and therefore will win in future. The author includes 20 exhibits, which are integrated into the paper. The paper uses endnotes instead of a bibliography.

Table of Contents:
Computer Security Industry
Industry Analysis - The External Environment
Six-segment Analysis
Porter's Five Forces Analysis
Strategic Groups
Firm analysis: Symantec vs. McAfee
Corporate-Level Strategy
Business-Level Strategy
Core Competences Analysis
Competitor Analysis: Symantec vs. McAfee
Strategy and Structure
Conclusion
Appendix
Exhibit 1: "Malware on the Rise"
Exhibit 2: Herfindahl Index for Security Software
Exhibit 3: Herfindahl Index for Security Suites in the U.S. Retail Market
Exhibit 4: Worldwide Security Software Revenue and Market Share Estimates (millions of U.S. Dollars)
Exhibit 5: Symantec's Financial Statements of Last 10 Years
Exhibit 6: McAfee, Inc. Financial Statements of Last 10 Years
Exhibit 7: Six Segment Analysis - Key Threats and Opportunities to Profits for the Computer Security Industry
Exhibit 8: Porter's Five Forces Analysis (Attractiveness of the Computer Security Industry)
Exhibit 9: Strategic Map of the Security Software Industry
Exhibit 10: History of Events at Symantec and McAfee
Exhibit 11: McAfee's and Symantec's Revenue, Net Income, and Net Profit Margins from 1998 - 2007
Exhibit 12: Locations of Symantec's (A - Cupertino, CA) and McAfee's (B - Santa Clara, CA) Headquarters, Eight Miles Apart from Each Other
Exhibit 13: Selection of Symantec's Offerings
Exhibit 14: Selection of McAfee's Product Offerings in the Home and Home Office and Small and Medium-Sized Businesses (SMB) Customer Segments
Exhibit 15: McAfee Products and Categories
Exhibit 16: Core Competence Analysis Using the VRI Framework for Symantec
Exhibit 17: Core Competence Analysis Using the VRI Framework for McAfee
Exhibit 18: Symantec's Organization (Author's Interpretation of Available Information)
Exhibit 19: McAfee's Organization
Exhibit 20: Relative Stock-Price Performance of SYMC and MFE, Compared with S&P 500 (December 8, 2003 to December 8, 2008)

From the Paper:

"In 2003, Microsoft made the tough strategic commitment of announcing the launch of a security suite. It took Microsoft three years when it finally launched its antivirus Live OneCare product in May 2006, a software suite that combined security features with PC utilities for $49.95 per year and designed to go heads on against Symantec and McAfee. This action by Microsoft was a strategic complement, as it caused McAfee to response in kind with the launch of Total Protection and Virus Scan Plus (both offered for $39.99), and Symantec with Norton 360 ($79.99) several months later."

Sample of Sources Used:

• "Analyst says unemployment hurting Symantec sales", Business Week Online, November 25, 2008, http://www.businessweek.com/ap/financialnews/D94M4K7O0.htm.
• http://www.knowledgerush.com/kr/encyclopedia/Herfindahl_index, accessed December 2008.
• "Symantec, McAfee lose market share - analyst", Reuters UK, January 18, 2007, http://uk.reuters.com/article/idUKN1846994920070118.
• "Gartner Says Worldwide Security Software Revenue Reached 20 Per Cent Growth in 2007", Gartner, June 17, 2008, http://www.gartner.com/it/page.jsp?id=697307.
• "Gartner Says Worldwide Security Software Revenue Totaled $7.4 Billion in 2005", Gartner, September 12, 2006, http://www.gartner.com/it/page.jsp?id=496491.

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