May 16, 2005
Computer Viruses
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Jack Horgan - Contributing Editor

by Jack Horgan - Contributing Editor
Posted anew every four weeks or so, the EDA WEEKLY delivers to its readers information concerning the latest happenings in the EDA industry, covering vendors, products, finances and new developments. Frequently, feature articles on selected public or private EDA companies are presented. Brought to you by If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us! Questions? Feedback? Click here. Thank you!

The Enterprise Security segment provides security solutions for all tiers of a network: at the gateways between the network and the outside world, at the servers that act as the network's vital organs, and at end-user devices including desktop PCs, laptops and handhelds. Comprehensive solutions include virus protection and content filtering, firewall and virtual private networking, or VPN, intrusion prevention, and security management. At the gateway and server level the products run on UNIX, Linux and Windows NT. At the client level, the products run on the Windows platform.

The Enterprise Administration segment offers open and modular products and services that enable companies to effectively and efficiently manage their IT infrastructures. Solutions allow customers to manage virtually any function at any point in the lifecycle of their computing systems and devices, from network auto-discovery and IT asset management, to operating system provisioning and application deployment, ongoing security updates and configuration management, rapid backup and disaster recovery, de-provisioning, and Help Desk remote control.

The Services segment delivers holistic security assessments, planning and implementation, proactive solutions for security management and response and knowledge transfer to develop internal security skills.

The Other segment is comprised of sunset products, products nearing the end of their life cycle.

McAfee Associates was incorporated in 1992 and completed an IPO. In 1997 Network Associates was formed by the merger of McAfee Associates and Network General. In 1998 was incorporated as a wholly-owned subsidiary of Network Associates, Inc., and as an online provider of PC security and management products and services for consumers. In 1999 completed its own IPO. From 1994 thru 1998 the company made numerous acquisitions. There were 10 acquisitions in 1998 including CyberMedia for $174 million and Magic Solutions for $140 million. In September 2003, the firm acquired Deersoft, Entercept Security Technologies ($195 million), and IntruVert Networks ($93
million), the last two companies are in the Intrusion Prevention arena. The company also repurchased the 25% minority interest in and merged with that entity. In June 2004 the firm changed its name to McAfee, Inc. At the end of 2004 the firm employed ~2,950 people worldwide. The company has a market cap of around $4 billion.

In 2004 North America accounted for 61% of total sales, EMEA 27%, Japan 6%, Asia Pacific 4% and Latin America 2%. Product Revenue by segment was perpetual 40%, hardware 27%, subscription 14%, retail 10% and other 10%.

In January 2004 the firm sold Magic Solutions service desk business to BMC Software, Inc for $47 million. In July 2004 the company completed the sale of its Sniffer business assets for $214 million. This product line included products designed to capture data, monitor network traffic and collect and report on key network statistics, and comprised a significant portion of total revenue.

At the end of 2004, the company had a total subscriber base of approximately 8.5 million consumer customers, compared to 3.7 million at the end of, 2003. Drivers of this subscriber growth included numerous virus outbreaks during the second half of 2003 and through 2004, including variations of Sasser, MyDoom, Bagle and NetSky, and continued strategic relationships with channel partners, such as AOL and Dell.

The majority of McAfee products are sold through partners, including corporate resellers, retailers and, indirectly, through distributors. Corporate resellers include ASAP Software, CDW, Dell, Insight, Softmart, Software House International and Software Spectrum. Retailers include Best Buy, Comp USA, Cosco, Fry's, Office Depot, Office Max and Staples. Independent software distributors include GE Access, Ingram Micro, MOCA and Tech Data. The firm's top ten distributors account for between 49% and 63% of net revenue in any given quarter. During 2004, Ingram Micro and TechData accounted for approximately 22% and 11% of net revenue.

McAfee has an alliance with America Online (AOL) which includes offering its anti-virus services as part of basic membership to AOL members.

McAfee offers two families of products: System Protection Software and Network Protection Solutions. The former delivers anti-virus and security products and services designed to protect systems such as desktops and servers. The later offers products designed to maximize the performance and security of networks and network intrusion prevention with McAfee IntruShield and McAfee Foundstone.

McAfee Internet Security suite includes full versions of VirusScan, Personal Direwall Plus, Privacy Service and SpamKiller for $62 (special offer $50).

For SMBs McAfee Managed VirusScan service provides anti-virus protection. In addition Managed Mail Protection screens emails to detect and quarantine viruses and infected attachments, and Spam and Desktop Firewall ASaP blocks unauthorized network access and stops known network threats. McAfee Managed Small Business service had about 2.2 million active subscriptions at the end of 2004.

Trend Micro was founded in 1988 by Steve Chang and began commercial operations in May 1998 and completed its initial public offering on the Japanese over-the-counter market in August 1998. Through a series of transactions in August 1996, Trend Micro Kabushiki Kaisha (a joint stock corporation) became the parent company of the Trend Micro group. The firm listed American Depositary Shares on the NASDAQ National Market in July 1999 in connection with a global offering of 12,750,000 shares. In August 2000 the firm appeared on Tokyo Stock Exchange.

In just over a decade, Trend Micro, headquartered in Tokyo, Japan, has grown into a transnational organization with over 2000 employees, and is represented in over 30 countries. The firm's market cap is $4.6B.

Initially, the sales of antivirus software products consisted primarily of sales of desktop programs, such as PC-cillin/Virus Buster, which were introduced in Japan in 1991. To meet increased demand for network-based products as companies shifted from stand-alone desktop personal computers to client-server enterprise networks in the early 1990s, Trend Micro introduced LANprotect, its first server application, in 1993. To address the increased risk of virus infection for enterprise networks resulting from widespread use of the Internet, they introduced InterScan VirusWall in 1996 to provide real-time scanning at the Internet gateway, the point where data enters the network from the Internet.
In 1998 they introduced Trend Virus Control System, the forerunner of Trend Micro Control Manager to enable network-wide antivirus software to monitor, update and manage from a central management console. In 2002 they unveiled Trend Micro Enterprise Protection Strategy.

Trend Micro PC-cillin Internet Security 2005 ($50) protects PC and home network against all types of viruses, worms, Trojans, and blended threats-including network viruses, like MYDOOM and SASSER. It also blocks hackers, detects and removes spyware, guards against phishing attacks, filters unwanted content, and minimizes spam. New features include Home Network Control and Wi-Fi Intrusion Detection-extending desktop security to home and wireless networks.

Trend Micro also offers product suite for both SMBs and enterprises that include security products for desktops & clients, outbreak management, email & groupware, networks, Internet gateway, file server & storage, mobility.

Trend Micro Network VirusWall is a family of easy-to-deploy outbreak prevention appliances that prevent or contain threats. For example, Network VirusWall 2500 is deployed inline with network traffic to address the threat to network security from network worms. It protects up to 4096 concurrent users with a 10/100/1000 Gigabit Ethernet - copper + fiber interface and features flexible configurations for high availability and redundancy to protect enterprises and mission-critical applications from attack.

Trend Micro Control Manager acts as a central command center for deployment of Trend Micro's threat-specific expertise across the network and to select third-party products to proactively manage outbreaks. Designed to deliver the flexibility and scalability organizations need, Trend Micro Control Manager offers a multi-tier management structure with extensive customization options for expanded control. Robust graphical reporting provides vital security insights such as sources of infections or vulnerabilities and consolidated, detailed information regarding virus events or unusual activities.

In 2004 Enterprise products comprised 78% of total annual revenues for 2004, with consumer products comprising 22%. During 2004 Gateway suite products grew 131% compared to the previous year, and consumer products experienced a 39% year-over-year increase. As a percentage of total revenue in 2004 Internet server accounted for 31%, Client/Server 28%, Consumer PC 22%, Gateway Suite 18%, and Network 1%.

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-- Jack Horgan, Contributing Editor.


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