new Norton accellerates
Tuesday, October 7, 2008
Symantec' growth
Let’s have a look to the Symantec last few years revenues: $5,874,419 (2008), $5,199,366 (2007), $4,143,392 (2006), $2,582,849 (2005), $1,870,129 (2004), $1,406,946 (2003). The main cause of the huge growth is certainly attributable to acquisitions. For instance the enormous growth between the 2005 and the 2006 is due to the acquisition of Veritas, Inc. Contrarily to McAfee, which focused mainly on antivirus, Symantec has focused on acquiring companies with complementary business segments. But there is also an alarming results that involves Norton: in the 2007 there was a drop in operating income in the consumer segment. In the 2006 it was 950Mn$ and in 2007 it was 931Mn$; that in correspondence of higher 2007 revenues. This weaker profitability is significant and it’s not justified in the annual report. My subjects regard a higher competitive pressure to assure arrangements with strategic partners, particularly a lower profitability with OEMs. In the 2008 operating income was 938.6Mn$, the results still show signs of a weakness.
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2 comments:
There may be a lower profitability with OEMs but isn't that how Symantec obtained a large market share in the first place -- via the 6-month trial installations on OEMs? Because of the lack of familiarity with other products, the typical home user would purchase a license when the trial expired and that would be that.
McAfee, on the other hand, I believe enjoys a nice chunk of the market share in the Corporate environment. Seeing that, employees go out and purchase a home license for the same software, assuming the personal version is up to par with the corporate license.
I agree with your first statement. OEM profitability is low but it's a strategic tool to retain customers.
Regarding the second statement I believe McAfee to be the only one able to compete in the corporate segment. True. But I see the "service division" in Symantec to be more equipped to be able to provide more "tailor made" solutions for big customers.
Only the "service division" accounted for $359.9Mn in the fiscal 2008, around 25% of the total McAfee revenues.
But…
“Last quarter the Bank of America decided to move forward with McAfee and they were an existing Symantec customer. In the banking industry there are huge pressures around costs. The Bank of America made a very expensive decision to say they were not going to use Symantec anymore. It was driven largely by the difficulty in Symantec's upgrade cycle.” (McAfee manager)
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