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Published: February 14, 2003

 
 

Symantec’s Strategy-Based Transformation

But Mr. Thompson believes companies will choose to buy an integrated security system rather than purchase antivirus from one vendor, firewall technology from another, and so forth. “Our strategy is different from every other security software company’s in the industry; we are not following a best-of-breed, point-product strategy,” he says.

The idea is that, although one vendor may offer a security component that outperforms a Symantec product, the cost and complexity of integrating multiple products outweighs any benefit to a corporation. This argument is similar to Oracle’s pitch for its E-Business Suite, which has yet to take significant market share away from the established players. It is not clear whether the enterprise security market will be any different.

“We buy best of breed when it comes to product,” says one customer, Jeff Moore, president of EcommSecurity Inc. in Atlanta. “We don’t recommend 100 percent of the Symantec product line.”

Ms. Hamilton counters, however, that most buyers of corporate security products are trying to reduce the number of vendors they deal with, but continue to buy from multiple sources. Although she believes Symantec’s offerings are competitive across the spectrum, she also stresses their ability to operate with other companies’ products. “Our strategy is not, ‘here’s a bundled suite that all works together, and take it, it’s all or nothing,’ ” she says. “It’s modular, and customers can take different pieces over time, blending our product with others.”

In any case, its product strategy appears to be working, allowing Symantec to claim the No. 1 spot in the $6 billion worldwide security market in 2002, with a 12 percent share, according to IDC. Using slightly different criteria, a November 2002 Gartner Dataquest report also shows Symantec as the world’s leading security software provider on the basis of new license revenue and market share in 2001. That report showed that Symantec’s market share of the worldwide security industry increased from 14.7 percent in 2000 to 21 percent in 2001, leading the list of the world’s top 21 security software vendors.

The Comeback
What happened in that wretched quarter back in 2001, and how did Symantec recover from it? Part of the problem was that while the company’s management was focused intently on its transformation goal to become a leader in serving the enterprise customer, the mainstay consumer business suffered. Some products were not upgraded rapidly enough to match competitors’ products, and the consumer unit’s marketing efforts remained diffuse.

More critically, a confluence of external events struck the company in that quarter. Worldwide sales for all consumer software went into recession; the dollar strengthened against the euro and the yen, negatively affecting the 45 percent of Symantec’s sales that came from overseas; and the company’s Macintosh-related business unexpectedly dropped 50 percent, possibly because of the perception that Apple Computer Inc.’s new operating system was less vulnerable to viruses.

“Most companies can suffer or endure one body shock in a quarter, but it’s unlikely a company can endure three,” Mr. Thompson says. “That made it very challenging for us to recover. We had to take some actions to shore up the business.” Some of those actions were obvious, like refreshing the consumer product line. Others seem counterintuitive, like raising prices on the basis of what turned out to be the correct hunch that the company’s primary competitor, Network Associates Inc., would follow suit to improve its own profit margins. At the same time, Symantec consolidated its marketing activities in a few key markets, rather than spreading them all over the globe.

Finally, Symantec got a boost from an unexpected quarter: hackers. Highly publicized viruses, like Code Red and Nimda, coupled with heightened security awareness of all kinds after the attacks of September 11, 2001, led many customers to consider Symantec’s products for the first time.

 
 
 
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Resources

  1. Ray Lane, “The Future of Enterprise Software,” s+b enews, 07/16/01; Click here.
  2. Jay Marshall and Daryl R. Conner, “Another Reason Why Companies Resist Change,” s+b, First Quarter 1996; Click here.
  3. Bruce A. Pasternack and James O’Toole, “Yellow-Light Leadership: How the World’s Best Companies Manage Uncertainty,” s+b, Second Quarter 2002; Click here.
  4. Benson P. Shapiro, Adrian J. Slywotzky, and Richard S. Tedlow, “How to Stop Bad Things from Happening to Good Companies,” s+b, First Quarter 1997; Click here.
  5. John P. Kotter, The Heart of Change: Real-Life Stories of How People Change Their Organizations (Harvard Business School Press, 2002)
 
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