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Symantec Ratchets Up Norton Renewal Prices

Posted by iTech - 2005-10-15

Symantec this week quietly raised the price of annual renewals for its consumer and small business line of security products by as much as 33 percent, saying that it was part of a long-considered move toward a subscription-based business model, and not a reaction to Microsoft's recent entry into the security space.
As of Monday, renewals for Symantec's popular Norton AntiVirus and Norton SystemWorks jumped to $30, up 20 percent from 2004's $25; annual subscription renewals to Norton Personal Firewall and the Norton Internet Security suite, meanwhile, climbed 33 percent to $20 and $40, respectively.

Symantec has charged existing users renewal fees for years to pay for minor software updates, new anti-virus signatures, and intrusion detection definitions to protect users against new worms, viruses, Trojans, adware, and spyware. These price hikes, however, are among the largest ever.

They also highlight the rapid rise in security maintenance costs for home and small business users. As recently as 2001, for instance, Symantec charged just $4 for an annual renewal to Norton AntiVirus; that translates into a 750 percent in five years.

"Starting with the 2006 releases, we're moving to a subscription-based model," said Laura Garcia-Manrique, director of product management at Symantec, in explaining the hikes.

"The rapid pace of threat evolution makes the old model of delivering new product upgrades about once a year obsolete," Garcia-Manrique said. "We've changed the model so that new functional updates, not just virus definitions, will be delivered throughout the year."

She stressed that the price increases were justified, noting in particular that product updates were included in the new subscriptions when earlier they had to be purchased separately when, for instance, Symantec did its annual updates in the fall. "Now, regardless of when you bought the product or from where, you will have the most up-to-date protection," she said.

Nor does Symantec expect a backlash from users. "We think there's enough value in what we're offering that as we run forward, users will renew their subscriptions," Garcia-Manrique said.

Existing customers will continue to have a choice on how they obtain a renewal, including purchasing the product at retail or online. The online and retail options, however, currently $10 more. For example, Norton AntiVirus costs $40 to download or buy at retail, compared to $30 to renew an existing subscription. There will always be a price differential between renewing and buying the actual product, Garcia-Manrique said.

The decision to move toward this pricier model was welcomed by financial analysts. Deutsche Securities, for instance, noted that the 20 to 33 percent increases in fees would keep Symantec's projection of an 18 percent growth in its consumer products feasible.

For her part, Garcia-Manrique said that the changes weren't in reaction to Microsoft's recent detailing of plans to push into the security space, or an attempt to make money while the getting is good.

"This isn't something that just happened," she said. "We looked at where the market is now and where the market is going; that's what's driven the price adjustment. "The competitive market may change because Microsoft may come in the space, and we may have to look at prices again then, but for now they're where they should be."

Some analysts commenting on Microsoft's recent security business announcements have noted that competition from the Redmond, Wash.-based giant will drive down prices, the opposite of what Symantec's doing.

In an online research note, Gartner analyst Neil MacDonald recommended that users "avoid long-term contracts for desktop security products, because price points will likely drop at least 10 percent per year after Microsoft’s entry."

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