Anti-virus vendors have hit back at claims that the market is commoditising and insist it can still be a lucrative niche for security resellers.

Sophos arguably drove another nail into the coffin of the traditional desktop anti-virus market last month when it launched a €217m (£171m) bid for security vendor Utimaco (Channelweb, 28 July).

In a tacit admission that it must diversify from its anti-virus roots, the vendor said in its accompanying statement that “data loss has joined viruses as a key concern for IT professionals”.

Security resellers are also questioning how much longer anti-virus can remain a core part of their business. The security channel’s one-time cash cow is now virtually saturated, is plagued by wafer-thin margins and has become dominated by online box-shifters working on cost plus one per cent margins.

Uncertain future
David Hobson, managing director of security reseller GSS, is among those to hold grave concerns about the future of the business anti-virus market, which is currently worth more than $3bn (£1.5bn) annually, according to IDC.

“We do sell a lot of anti-virus products and retain margins on it, but it is not easy,” he explained. “As a market, it is turning into a commoditised space and many resellers in the game are ambulance chasers selling licence keys at cost plus one or two per cent.”

Hobson also claimed that anti-virus technology is set for a major overhaul.
“Anti-virus as a technology is also going to struggle because the size of a virus scanning tool is too large. Anti-virus also has to become more proactive, rather than reactive. How it will change, I do not know,” he said.

“Microsoft entering the market with Forefront further complicates the situation. We will not know for a while how this will affect the market, but it is starting to take market share.”

Trend Micro is another security vendor keen to shake off its reputation as a pure-play anti-virus vendor, having recently diversified its content security offering.

But Anthony O’Mara, EMEA vice president of sales at Trend, was keen to quash talk of commoditisation and maintained there is still good money to be made from anti-virus with the right business model.
“It is convenient for vendors to say anti-virus is commoditised if they have poor results,” he said. “It is also convenient for resellers and distributors ­ it gives them a way out.

“But if an industry is commoditised it must be working completely and have very little differentiation. If you look at anti-virus, there may be many vendors, but I do not see it as commoditised because the products are differentiated and the threat landscape is constantly evolving.”

O’Mara claimed Trend has marked itself out from the crowd with recent product launches, including its Worry-Free Remote Manager, which allows resellers to manage multiple SME clients from their own office.
He added that resellers that have evolved their strategy from simply fulfilling orders to a more proactive sales model can still gene-rate handsome margins from anti-virus.

VARs also have a role to play in education to help customers cope with the exponential growth in the volume of unique malware, O’Mara counselled.

“The industry is evolving and there are still a lot of opportunities for businesses to make money, it’s just no longer falling into resellers’ laps,” O’Mara said. “So it is the responsibility of the vendor and reseller to articulate what that is and for the reseller not to be lazy about it.
“The resellers that say they cannot make margins are the ones that are waiting for people to buy, not those that are selling.”

Evolving marketplace
David Ellis, director of e-security at Trend distributor Computerlinks, agreed that the recent evolution of the threat landscape has ensured anti-virus remains a “healthy and growing” market.

However, Ellis claimed anti-virus can no longer be seen as a separate market because vendors are now integrating the technology into broader security solutions.

“The threat landscape has changed, which is fuelling the market to refresh to new technologies and in turn fuelling the opportunity for the channel. The gateway is a lot more porous now because there is a lot of information on different endpoint devices such as USBs and smartphones,” said Ellis.

“There is definitely a trend towards consolidation on the desktop, so rather than having 10 vendors’ solutions on your desktop it makes sense to consolidate them. Anti-virus vendors are now providing other functionality such as data leakage protection, controlling USB ports and firewalls. Vendors such as Trend are well placed to cut the overheads that users face.”

Hobson agreed there may be an opportunity for VARs to cash in on anti-virus for devices such as BlackBerry smartphones, but claimed the market had not taken off yet. He also urged vendors to ensure potential new markets for anti-virus are not dominated by ambulance chasers.
“Historically, the vendors have not been good at protecting margins for resellers that add value,” he said.