Standing Guard on Software's Next Frontier

There's still room for antivirus makers in Vista.
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A new report suggests that security software heavyweights like

McAfee

(MFE)

and

Symantec

(SYMC) - Get Report

can take pleasure in the looming debut of

Microsoft's

(MSFT) - Get Report

Vista operating system.

But smaller third-party software vendors may have a bumpy road ahead.

"There's been this little problem with security on the Windows platform forever," says Andrew Jaquith, a security industry analyst with the Yankee Group, and author of the report. One of the key goals for Vista -- the company's first major update to its OS in five years -- is to increase security, to "make it less of what it has been, which is a breeding ground for malware, spyware and other problems."

Jaquith explains that the measures Microsoft has implemented will definitely increase security in the platform. Among other capabilities, it will be armed with a two-way firewall, antispyware and antiphishing features, including a color-coded toolbar in Internet Explorer 7 that will indicate whether a site is safe for surfing or potentially malicious.

But perhaps in order to avoid unwanted scrutiny from regulators, the company did not put antivirus capabilities in Vista, Jaquith says, so incumbent vendors -- Symantec, McAfee,

CA

(CA) - Get Report

,

Trend Micro

(TMIC)

and

Panda Software

-- won't see their businesses dramatically affected.

These companies have the advantage of having customers who have worked with them a long time, they are established companies in the market and they can manage large enterprises effectively, he says.

Still, Microsoft's own antivirus products, OneCare Live for consumers and Client Protection for the enterprise, may hurt the market share of these competitors somewhat.

Antivirus is a $2.6 billion market -- the largest part of the total $3.6 billion aftermarket for security, according to Yankee Group numbers.

On the other hand, companies with specific stand-alone products that overlap somewhat with Vista "are going to take a hit," he says. For instance, it will be hard for antispyware purveyors like

Lavasoft

and

Webroot

to compete with the free antispyware tools in Vista.

Yankee Group also anticipates that Vista will "significantly shrink" the market for desktop firewalls and might decrease the need for third-party products for disk encryption, device control and some types of host-intrusion-prevention software.

However, the technology behemoth still has some usability issues to confront before it threatens to wipe out the competition.

Vista's user-account controls will be annoying to users, Jaquith says. Rather than having smart default settings, the program constantly throws security dialogue at users, he points out -- so many will likely resort to "slapping it like an alarm clock in the morning."

The company also insists on using ActiveX embedded-file technology, which continues to be a security problem, Jaquith says. He doubts Microsoft will reach its goal of selling 400 million Vista systems in 24 months, as companies will wait to upgrade until Vista's short-term execution challenges are worked out.

"Microsoft needs Vista to be a hit," he notes. "If it's a winner, it's definitely going to boost their stock."

But more likely is the following scenario: "When you combine the fact that it is a little late with it, that the security features are going to be problematic in the short-term, and in order to run it, most people are going to have to upgrade their hardware, these three factors suggest a more moderate uptick (in the stock price) than Microsoft is hoping," he says.