Symantec quietly hikes Norton renewal prices

On Monday, the security software giant raised the prices Norton users pay for another year of updates to their installed products by as much as 33 percent. The updates include traditional virus signatures and product enhancements, which are a new feature and part of Symantec's move to a subscription model.

Cupertino, Calif.-based Symantec announced the 2006 editions of its Norton products last month. The company at the time published prices for new users of the products: Norton AntiVirus, Norton Internet Security, Norton System Works and Norton Personal Firewall. At the time, it did not disclose pricing for existing users signing up for another year of updates. It activated the higher prices on Monday, a company representative said.

The price hike could be seen as a "last hurrah" before Microsoft enters the security arena next year, analysts at Merrill Lynch wrote in a research note this week. The move could alternatively be "a decisive refusal to be intimidated by a pending market entry," the analysts wrote.

As Symantec has 40 million subscribers, the price rise could add as much as $250 million to the company's revenue in its next fiscal year, according to the Merrill Lynch note.

The price increase is not typical of the competitive consumer security software market, Forrester Research analyst Maribel Lopez said. "The trend has always been downward. Consumers would expect pricing to be flat or down," she said. Nevertheless, people often don't notice prices when renewing their product, Lopez said.

Microsoft's entry into the market is looming like dark clouds in the distance, she added. "The biggest issue is going to be whether or not the bottom drops out of the market when Microsoft enters," she said. "Symantec is bringing in the money while the getting is good."

Microsoft is readying products to protect computers against worms, viruses, spyware and other threats. Windows OneCare, its consumer antivirus and anti-spyware service, has been available to beta testers since July. The software maker last week said a test version of a product to protect business computers would be available by year's end.

Symantec's price shift is unrelated to the prospect of competition from Microsoft, said Laura Garcia-Manrique, a senior director of product management at the security company. The changes reflect that customers now get software enhancements in addition to virus signatures, she said. Previously the product updates were sold separately.

"We've taken a number of actions, including the increase of our subscription prices...to facilitate our move to a subscription model," Garcia-Manrique said. Symantec has also cut the upfront price of Norton AntiVirus by $10, she noted.

"This move on our part is the right move for the market. If Microsoft's actions in some way change that, then we will have to look at what direction the market goes," Garcia-Manrique said. Symantec CEO John Thompson on Tuesday predicted his company will beat Microsoft in the security space.

Some of Symantec's rivals could see the price hike as an opportunity to win new customers. Computer Associates, for example, charges $29.99 to renew its Internet Security Suite--a price that includes product updates, a CA representative said. That compares with $39.99 to renew the Norton Internet Security suite.

At Trend Micro, renewing its PC-cillin Internet Security costs $24.95. The company expects to win some Symantec customers to switch. "There is a disjoint between the consumer expectation and the shift Symantec has made in their pricing," said Lane Bass, general manager of consumer products at Trend Micro.

Raising prices could alienate some customers, Patrick Hinojosa, chief technology officer at security provider Panda Software said. "It does not seem like a good idea to reward customers who used your product for at least a year."