ANTIVIRUS - Miracle cure
Dr Solomon's and Network Associates have ended their battle and merged resources to give antivirus products a clean bill of health.
The bitter war between antivirus vendor Dr Solomon's and arch rivalged resources to give antivirus products a clean bill of health. Bill Larson's Network Associates came to an end last month, when the latter swallowed up Dr Solomon's in a $640 million buyout.
Dr Solomon's was a UK success story. Started by Alan Solomon and his wife Susan in their front room in 1986, the company managed to capture more than 70 per cent of the UK antivirus market and grew to its multi-million dollar value.
Solomon, who had a PhD in econometrics, saw a need for antivirus software after he became involved in data recovery work. As fears about the effect of viruses grew in the UK, the vendor's main product, Dr Solomon's Toolkit, found a corporate market willing to buy. At the time, it commanded an almost virgin market and few competitors had its technical edge.
The nearest rival was US-owned McAfee, which at the time was making a fortune with VirusScan. The product was graphically better than the UK one and easier to use, but was less effective at spotting viruses.
McAfee was selling VirusScan in the UK through International Data Security (IDS). Bob Birtles, an IDC consultant, says although McAfee chief executive Bill Larson had made it clear he wanted to expand into the UK and Europe, he seemed happy to let things lie in the short term. Happy, that is, until 1995, when Dr Solomon's decided to enter the US market and seriously challenge McAfee's share. Its approach was initially low-key, barely amounting to 50 marketing and distribution staff.
Dr Solomon's marketing director, Mike Hill, said at the time the aim was to get the product recognised by the US market through the use of mailshots and product reviews.
'We have a problem in that the US magazines tend to judge products by what they look like and ease of use, rather than their ability to check viruses,' he added.
But the fun really began when a magazine identified Dr Solomon's as being able to pick up a type of virus that McAfee could not. the company's marketing arm sent out a mailshot to McAfee customers showing a picture of a blindfolded cat. It stated that VirusScan was about as good at fixing viruses as a blindfolded cat was at catching mice.
According to insiders in the antivirus camp, Larson was furious. The mailshot wasn't an attack on other antivirus companies - it named Norton and others as being able to find this particular virus - it was a direct assault on McAfee.
'It's the equivalent of Dr Solomon's going into a bar and picking a fight with the biggest person there,' said one McAfee agent at the time. 'Larson isn't the sort of bloke who would turn down such an invitation. He would see it as personal.'
In 1995, Larson ordered a direct assault on Dr Solomon's UK market. Taking the sole rights to distribute McAfee products from IDS, he set up a McAfee headquarters to mount an aggressive campaign to launch VirusScan into the European market. Its first move was to cut the price of VirusScan so it was well below that of Dr Solomon's Toolkit.
Meanwhile, Alan Solomon sold the company to three senior managers - chief executive Geoff Leary, financial director David Stephens and operations director Keith Perrett - for #30 million. He remained on the board as a non-executive director and was hired as a company consultant.
As the battle heated up, McAfee launched an advertising campaign that claimed Solomon had retired because of McAfee's price assault, and asked why, if it was the number one antivirus software company, Dr Solomon had sold his practice. It contained figures that claimed McAfee had a 68 per cent market share in comparison with Dr Solomon's two per cent. The ad was branded unfair by the Advertising Standards Authority.
The ASA ruled that the McAfee advert was 'misleading and denigratory', and added that the vendor had failed to substantiate figures that showed it had a 68 per cent market share. McAfee claimed the figures came from IDC, although others in the industry said they were out of date.
Hill asserted that McAfee's aggressive advertising campaign was because Dr Solomon's was starting to cut into its US marketing base. 'Larson wants Dr Solomon's out of the US, so he is trying to damage it in the UK,' he complained.
But McAfee's new UK director, Jeff Barnes, was unrepentant and promised more of the same type of advertisements. 'Dr Solomon's has had its way in the UK for far too long and now it's bleating that it's about to lose it,' he said.
Tough talk, but not as tough as the bile his boss was spitting in the US. According to one US newspaper, Larson grabbed the microphone at a staff barbecue last year to state his policy on Dr Solomon's. 'I don't care if I don't make a goddamn dime. We're going to take him down,' he bawled into the mike.
In the short term, Larson had other things on his mind. McAfee had bought a new Hunter antivirus search engine from a Czech vendor. It then merged with Network Associates to form a $1.3 billion company. Once this was settled, Larson ordered his US software experts to take apart the Dr Solomon's Toolkit to find out what made it tick.
The result was a bizarre press statement which claimed Dr Solomon's' programmers had devised a 'cheat mode' which kicked in when the product encountered more than 11 viruses. It could identify more than 80 per cent of unknown viruses which the ordinary program could not.
McAfee argued that product reviewers tested anti-virus software with large numbers of viruses, while users were unlikely to be infected by more than one. They demanded that it be shut off when the product was tested.
But this attack played into the hands of Dr Solomon's marketing department.
'It's actually asking us to reduce our detection rate,' an amused Hill pointed out.
Dr Solomon's senior technology consultant, Graham Cluely, said: 'If Network Associates wants to compete head-to-head with us, one has to wonder why it just doesn't boost its own detection rates.'
Hill added: 'It shows Network Associates must be rattled if it's taking up valuable lab time analysing our product.'
Meanwhile, Dr Solomon's was strengthening its relationships with resellers to improve the distribution of its products in this country and the US.
Network Associates had long been criticised in the US for ignoring the channel, although in the UK, its marketing manager Caroline Kuipers insisted it was trying to build relationships with its resellers.
One Dr Solomon's recruit, which seemed a coup at the time, was long-time McAfee agent IDS. But the joy of getting it online was short-lived, as IDS soon folded in a copyright war with Network Associates.
However, the policy seemed to be paying off. Dr Solomon's was making significant in-roads into the US market. Its share price doubled to $32 in the 18 months since it was first listed on the Nasdaq and Easdaq stock-markets. In the nine months to the end of February, it produced operating profits of #9.6 million and sales soared from #25.4 million last year to #41.5million.
Rumours started to circulate that Dr Solomon's management team was interested in selling out for the right price. A number of buyers were mooted, including Symantec.
Analyst Sharon Saw, of Saw IT, says Network Associates was faced with a tricky situation. While Dr Solomon's was beginning to do well in the US, VirusScan was always playing second fiddle in the UK and Europe.
'If Dr Solomon's was bought out by a bigger company, there was a real risk that it could seriously damage Network Associates' US empire,' she argues. 'The option was to buy the company out and take control of the UK and Europe market at the same time.'
The $640 million price tag for the company stunned the industry. Analysts believed it could only be worth $90 million and felt there must have been some pretty tough bidding going on.
Symantec's communications manager, Gunilla Larsson, while refusing to say if it had been involved in the bidding, did say the price was too high: 'We allied with IBM instead, and a week later, Network Associates announced the merger. That speaks for itself.'
So now that Larson has control of Dr Solomon's, what does he do next?
Symantec's Larsson and Saw say the companies have competing products and there has to be rationalisation.
Security analyst Henry Brysh, of Corporate Network Services, says there are two possible outcomes from the merger. 'Either Network Associates wants to merge the best of the two companies' products, or it wants to bugger around with the market by closing its rival,' he argues.
But Dr Solomon's finance director, David Stephens, who stands to make #13 million out of the sale, insists that there is no way Larson would pay $640 million for the company and then close it.
What has been agreed is that the two companies will design a product that will feature the best bits of both products and will target the corporate market. This seems to back up what observers have been saying throughout the antivirus turf war - despite what the companies said, McAfee was good on usability and Dr Solomon's was better at finding the viruses.
The new product will be out in the middle of next year, but in the consumer market, Dr Solomon's and VirusScan will continue operating, Stephens insists.
Larson has promised to honour Dr Solomon's helpdesk and service support agreements, which some observers had identified as being more generous than Network Associates. 'It doesn't seem that Network Associates wants our American operation to close either,' Stephens claims.
He believes that Larson wanted to keep Dr Solomon's staff and expertise to launch Network Associates into Europe. But as Symantec's Larsson points out, the two companies have essentially been at loggerheads for so long, it might prove difficult to integrate.
Bill Larson has down played his previous battles with Dr Solomon's. He likened his hostility towards the company to a father's hostility to a potential suitor for his daughter. But once she marries, he believes the husband is the best guy in the world.
Dr Solomon's staff seem secure about their jobs and are seeing the humour in their situation. Asked how they feel about working for the man they dubbed 'Satan', one quipped: 'Oh, he's not Satan anymore. He is Mr Larson and we loved him all the time really.'