Updated at 6:15 p.m. PST with Microsoft and McAfee comment, at 5:30 p.m. with Sophos comment, and at 4:40 p.m. with customer comment.
Microsoft on Tuesday said it is changing its strategy for offering PC antivirus software, with plans to discontinue its subscription-based consumer security suite and instead offer individuals free software to protect their PCs.
Code-named Morro, the new offering will be available in the second half of 2009 and will protect against viruses, spyware, rootkits, and Trojans, the company said in a statement.
With the arrival of Morro, Microsoft plans to stop selling the Windows Live OneCare service, although the two services are not identical. Morro lacks OneCare's non-security features, such as printer sharing and automated PC tuneup. Morro will, however, use fewer resources than the subscription-based offering, making it better suited to low-bandwith systems and less powerful PCs.
Microsoft decided to switch to a free product because there are still so many PCs out there that lack any antivirus software.
"Because they're not concerned about malware, the number of people who don't have antivirus software or don't keep it up to date exceeds 50 percent in developed markets, and it's worse in emerging markets," Amy Barzdukas, senior director of product management for the Online Services and Windows Division at Microsoft, said in an interview. "Live OneCare was tailored for developed markets with broadband...and it's not meeting the needs of a lot of customers."
Asked why the company wouldn't just offer both the free and subscription versions, Barzdukas said: "Having core anti-malware at no charge for consumers, we believe, we will protect more consumers that way." Consumers who want more than the features Morro will offer have "fine alternatives from third parties" to buy, she added.
Despite the fact that McAfee stands to lose paying customers to Microsoft's new free software, McAfee spokesman Joris Evers said the news signaled a defeat for Microsoft.
"Consumers have voted; OneCare, in its two years on the market, has achieved less than 2 percent market share," he said in an interview. "Microsoft is giving up and has defaulted to a dressed-down freeware model that does not meet consumer security needs. This is good news for McAfee."
Barzdukas dismissed the notion that Microsoft was responding to market share or competitive pressures. "If the current approach isn't working... (as far as protecting consumers broadly) we need to go with a new approach," she said.
Asked if Microsoft would ever consider bundling the security features into Windows, Barzdukas said: "I can't foresee such a time."
Representatives from Symantec could not be reached for comment Tuesday.
Graham Cluley, senior technology consultant at Sophos, said the news doesn't impact his security firm because it focuses on the enterprise market.
"I think this announcement may cause some sleepless nights for the chiefs at McAfee and Symantec--they've always done well out of the consumer anti-virus market, and with tougher financial times ahead of them (they) won't be pleased to see the possibility of that evaporating further," he wrote in an e-mail response to questions.
Microsoft had been selling Windows Live OneCare for $49.95 per year, which covered up to three PCs and offered centralized backup and optimization features in addition to security capabilities.
Windows Live OneCare will continue to be sold for Windows XP and Vista via retailers through June 30, 2009, and direct sales will be gradually phased out as Morro becomes available. "Microsoft will ensure that all current customers remain protected through the life of their subscriptions," the statement said.
Morro, which will be available for download over the Internet, will work on Windows XP, Windows Vista, and the upcoming Windows 7.
The news frustrated OneCare customer Cas Purdy who complained on Facebook: "I just paid for OneCare. I'm kind of bitter."
Purdy, who heads up public relations at security firm Websense, said in a follow-up phone interview that he paid for his OneCare subscription a few weeks ago for his home laptop. Websense does not compete with Microsoft on consumer software.
"I'm all for a free tool but given that I just paid for it...we'll see," he added.
Microsoft's Barzdukas said customers should contact customer support if they have a concern. "We will absolutely do the right thing by our customers, and if the customer wants to call our free phone support line we'll make sure they are happy," she said.
A posting on the Windows Live OneCare Team Blog has a detailed FAQ for customers.
Microsoft started selling OneCare in May 2006, three years after signaling its intent to enter the security software market with its purchase of Romania's GeCad.
Although OneCare received only mixed reviews, it significantly shook up the security software market, resulting in generally lower prices.
The software maker has also started selling its Forefront line of security software for businesses and indicated at its Microsoft Online launch on Monday that it plans to expand its lineup of hosted security services.
CNET News' Ina Fried contributed to this report.