by MaryAnn Evans

Created on: June 16, 2009   Last Updated: June 05, 2011

The arrival of Microsoft's [MSFT] free anti-virus service (code-named Morro) is imminent. It is claimed that this much-anticipated software will protect against spyware, malware, trojans and viruses. The aim of Morro is to renovate Microsoft's [MSFT] own security flaws and provide reliable protection to its costumers. However, what is currently less clear is how this will affect the sale of products by anti-virus companies, such as Symantec Corp [SYMC]. and McAfee Inc [MFE].

Morro, named after Morro de Sao Paolo beach in Brazil, has been a hotly debated topic for over six months and Microsoft [MSFT] has been predictably secretive about the project. In fact, no one outside the company has seen the new software yet. It is believed that the anti-virus software will be a 'cloud-based' system. In other words, Morro will function via all of its users Internet traffic to a data center, where the information will be processed and any spy ware, malware of viruses can be identified and blocked.

This alone may raise concerns for some about the performance speed of Morro, not to mention security and privacy concerns. Despite the fact that a whole host of sources trace online activity, many customers may find the prospect of their traffic being filtered back to Microsoft [MSFT] rather off-putting. Therefore, it is believed by some that Morro will have little or no affect on security companies.

For example, Joris Evers of McAfee [MFE] believes that "...our twenty-plus years in this business will provide consumers the confidence to choose McAfee as their trusted adviser and expert in security." Similarly, Rowan Trollope of Symantec [SYMC] believes that Microsoft's [MSFT] reputation is "...not one based on first-class security protection."

Anti-virus software is big business, earning Symantec [SYMC] and McAfee [MFE] a combined $3.14 billion last year. Even assuming that many customers remain loyal, it is perhaps unrealistic to imagine that these kinds of profit margins can be sustained indefinitely.

Microsoft [MSFT] is selling Morro as a loss leader in order to boost the sales of Windows computers. Therefore, it is incredibly difficult for Symantec [SYMC] and McAfee [MFE] to compete on the same level, because security software is their exclusive source of income.

It is worth considering the fact that there are already many free anti-virus packages available on the internet, which have certainly not had a detrimental affect upon the security business thus far. However, it may be that customers are swayed by the Microsoft [MSFT] brand name, believing it to be reliable and safe.

On the other hand, Microsoft [MSFT] is not renowned for its security and Windows computers are much more susceptible to malware than the equivalent Apple Mac [AAPL] machine. Another issue, which may prove problematic for Microsoft [MSFT], is whether the security team is wholly independent. One of the reasons for the longevity of McAfee [MFE] and Symantec [SYMC] is that both companies are independently audited to ensure their software is secure.

There are likely to be numerous customers who test Morro, simply because it is free. Whether it will go on to affect the whole of the industry will depend upon the effectiveness of the software. This is something only time will tell.

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