The company today announced plans to rent its software over the Internet. Symantec will make its antivirus and security software available to Internet service providers (ISPs), application service providers (ASPs), and portal sites, which, in turn, will offer the software to consumers and businesses online.
With the move, Symantec joins a growing field of software makers--including Oracle, SAP, PeopleSoft, and Intuit--who are entering the software rental business, a market that International Data Corporation predicts will grow to $2 billion by 2003.
The software makers believe the nascent application hosting market will explode as businesses choose to save money by renting their software--from email to financial applications--online. Software companies and ISPs that enter the market will not only provide the applications, but will manage a customer's networks, saving businesses from adding the staff needed to carry out the work of updating and maintaining software.
Analyst Clay Ryder of Zona Research thinks Symantec's strategy is smart, but the company must prove it can attract enough customers to make a profit without hurting its existing revenue from sales of shrink-wrapped software--an issue all software makers face in the new market.
"Say you charge 38 cents for virus checking. Are customers going to spend the $20 to $30 that Symantec would get from buying the software off-the-shelf?" Ryder said. "At 38 cents, they'd have to use it 50 to 60 times to get the revenue back to where it was. The question is: Do people religiously scan for viruses 50 to 60 times?"
Application hosting over the Internet has only recently become a business reality as high-speed Net connections become more widespread and affordable for businesses big and small.
Software rental and hosting options are starting to blossom in the so-called back-office software market, for software including customer relationship management (CRM) and enterprise resource planning (ERP) products.
Software giant Microsoft is also investigating options for making its software available on a rental basis.
Symantec, based in Cupertino, California, said today it has already signed on two partners--Inktomi, which provides software and services to ISPs; and a new ISP called FamilyClick--and that more deals will be announced later this year.
Garry Warren, Symantec's vice president of strategic development, said the company will target both consumers and businesses of all sizes. It will make available its antivirus software and I-Gear Web filtering technology, which controls users' access to Web sites and scans email for spam or indecent material, he said.
In the near future, consumers can go to a portal site, click a Symantec button, and for a small fee, access its software, said Warren.
"Who likes to install software on their desktop?," Warren asked. "Our goal is to allow you to hook to an ISP or portal, and you have access to our software."
While Symantec will continue to sell shrink-wrapped boxes, installing the company's security software on networks makes sense because every byte of data is passing through the Internet these days, he said. "We're the new immune system."
Symantec executives are also touting the ability for households to create user profiles that allow them to control the Web sites their children access or who they can email.
Ryder, however, said that technology is available for people who use the current Windows operating system. "With Windows 95 or later, you can lock out Web sites," he said. "It may take some time, but a lot of the features are already there."