06/11 - Microsoft buys antivirus technology - East Valley Tribune: Business

06/11 - Microsoft buys antivirus technology

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Posted: Wednesday, June 11, 2003 10:33 am | Updated: 1:10 pm, Thu Oct 6, 2011.

SEATTLE - Microsoft Corp., a regular target for software attacks and viruses, is hoping to strike back with a weapon of its own.

Microsoft is acquiring antivirus technology from a Romanian software company and plans to develop its own antivirus product, the software company said Tuesday.

But in stepping into the new market, Microsoft faces direct competition with specialty software security companies to whom Microsoft has long ceded the profitable market.

Microsoft signed an agreement to buy the intellectual property and technology assets of antivirus software and consulting firm GeCAD Software Srl. of Bucharest for an undisclosed amount. Some of the company's software developers will join Microsoft, but details haven't been finalized, said Mike Nash, corporate vice president of Microsoft's security business unit.

Microsoft plans to release its own antivirus product at some unspecified date, but has not decided whether basic antivirus technology will be bundled into its Windows operating system, Nash said.

The company will sell corporate customers and consumers subscriptions for the updated innoculation files that protect against new viruses.

Nash said Microsoft needs to do more to protect its customers from viruses and other malicious programs, in addition to working with security companies, such as Symantec Corp. and Network Associates Inc., which make the most popular antivirus programs for consumers.

The president of Network Associates, Gene Hodges, said Microsoft told his company it would not bundle antivirus capability into the Windows operating system.

Network Associates announced an alliance last month with Microsoft to share sensitive details about the latest computer threats facing Windows users.

"We intend to keep up with the alliance unless Microsoft changes it plans from what they've told us," Hodges said.

But some questioned Microsoft's foray.

Michael Rasmussen, an analyst at Forrester Research Inc., compared Microsoft's decision to "mafia-type" behavior of offering additional protection for customers who pay extra for it.

"The world does not want Microsoft to be a security vendor, it wants Microsoft to provide secure products," Rasmussen said.

Microsoft, which has struggled to improve its software security under its "Trustworthy Computing" campaign, has been sensitive to criticism about the susceptibility of its products to computer viruses. The company has responded by tightening the security of its popular Outlook e-mail software, but its reputation has largely hinged on consumers successfully using products outside Microsoft's control.

Antivirus vendors have been painfully aware what could happen if Microsoft moved into the business. Network Associates and Symantec, for example, have starkly warned investors their business could suffer dramatically if Microsoft decides to build antivirus features into Windows.

Network Associates cautioned in a November 2002 filing with U.S. regulators that such a move by Microsoft "could render our products obsolete and unmarketable."

Symantec warned in a February 2003 securities filing that a decision by Microsoft to include features in Windows that compete with its core products "may decrease or delay the demand for certain of our products, including those currently under development."

In a statement, Symantec said it was still deciding the ramifications of Microsoft's announcement.

"While we still need to understand the full implications for this announcement, we applaud Microsoft's efforts to develop an operating system upon which antivirus vendors can build more effective protection," the company said.

Sophos Inc., another popular antivirus company, suggested that Microsoft might not realize how much effort and expense was involved in fighting viruses.

"Providing a viable antivirus solution to the market requires far more resources and commitment than most people realize," said Chris Belthoff, senior security analyst at Sophos.

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