Rival Calls Microsoft's Security Pricing 'Predatory,' 'Ruthless'

Microsoft's priced its consumer and enterprise security software at levels so low that it's putting the entire security software ecosystem at risk, the chief executive of a Florida company said Wednesday.

"Microsoft's practicing a form of predatory pricing," said Alex Eckelberry, who heads Clearwater, Fla.-based Sunbelt Software. Sunbelt develops a variety of consumer and enterprise security products, but is best known for its CounterSpy anti-spyware application. In December, it acquired firewall maker Kerio Technologies, Inc.

"Predatory pricing relies on a manufacturer losing money in the short term to dive out competitors in the long term," said Eckelberry. "One could argue whether [what Microsoft is doing] is an antitrust issue, but it has a potentially chilling effect on the security landscape."

How Microsoft prices its security products has been a concern of security analysts and vendors since at least February, when the company set the cost of its Windows Live OneCare security subscription service at $49.95.

But until now no one had put the pricing differences between Microsoft and its rivals into black and white.In his blog Tuesday, Eckelberry posted an analysis of Microsoft's pricing of its $49.95 consumer-oriented OneCare, and its Antigen messaging security line, which was announced earlier this month.

Eckelberry compared the pricing of OneCare and the Antigen titles with similar offerings from McAfee, Symantec, and Trend Micro. According to his analysis, OneCare's price undercuts Symantec's and McAfee's current consumer products by 44 and 29 percent, respectively. The difference between Microsoft's Antigen line and enterprise programs from its rivals is even greater: for a two-year license, Eckelberry calculated Microsoft's prices are between 53 and 63 percent less than the competition.

"That's flat out wrong," he said. "They should have to compete on a level playing field.

"The problem is not about them getting into the security space, it's about them getting into the security space at 'Crazy Eddie' prices," said Eckelberry.

Microsoft answered Eckelberry's claim of predatory pricing with an oblique response. "The market is full of opportunity for all security vendors to play a role in customer security," a spokesman for the Redmond, Wash. developer said in an e-mail to TechWeb. "We believe that Windows Live OneCare and Microsoft Antigen products provide a good value to customers and that all firms should compete to provide good value."Rivals McAfee and Trend Micro declined comment, and Symantec did not immediately return a call.

"All I want is fair competition," said Eckelberry.

But John Pescatore, research director at Gartner, called Eckelberry's analysis "phony" and said his numbers didn't add up.

"It's hard to call it predatory," Pescatore said. "The actual price you pay [for McAfee and Symantec consumer products] is lower than the numbers he's throwing out. Not everyone pays list price; they get it free for 3 months or 6 months when they buy a PC, or pick it up at retail for $10 on special."

"I think it's aggressive, certainly, but calling it predatory is wildly inaccurate."Eckelberry countered. "The whole consumer area is a red herring. That's not the big issue. It's the enterprise." That's where the real money is made, he said.

"When I got the Antigen pricing last week, I was floored," he added. Microsoft's pricing of its Antigen line starts as low as $0.65 per user per month for gateway anti-virus defense. This pricing, Eckelberry said, was even lower than the cost of the Antigen line before its maker, Sybari Software, was acquired by Microsoft in 2005.

Microsoft's pricing, which at one point in his blog Eckelberry called "ruthless," won't just drive rivals out of business.

"It has far-reaching effects. If a majority of companies used Microsoft products to protect themselves, and an exploit leveraged, say, an Antigen vulnerability, one targeted attack could bring down a lot of companies," said Eckelberry.

"Stopping Redmond in its march for world domination is for Microsoft's own good," Eckelberry concluded in his Tuesday blog. "Destroying their own developer ecosystem is the worst possible thing they could do. I won't suggest what I think should be done. But something does need to happen."Sunbelt Software is a Microsoft partner, and according to Eckelberry, "does business with Microsoft." However, the two have clashed in the past. In 2004, after Microsoft acquired anti-spyware maker Giant Company Software, Sunbelt briefly claimed partial rights to Giant's technologies. Microsoft later agreed to provide spyware signatures to Sunbelt through July 2007.

Giant's technology was used to create Windows Defender, the free anti-spyware application for Windows XP that will also be rolled into Windows Vista when that operating system debuts in January 2007