Microsoft bought anti-spyware technology last week to protect its Internet Explorer browser from surging rivals like Mozilla's Firefox, Gartner analysts in the US have said.
Microsoft has made plans to purchase US-based Giant Company Software, and would release a beta edition of a spyware-fighting program for Windows 2000 and XP within 30 days.
Spyware is software installed without users' knowledge or permission, and covers everything from relatively benign adware that tracks websites visited to malicious key loggers that record every keystroke in the hope of stealing passwords and financial account info.
Spyware has been blamed for slowing down PCs, making them unusable on the web due to incessant pop-ups, and for causing large fractions -- 25 to 50 percent -- of all help desk calls to the likes of Dell and Microsoft.
"The real reason for the acquisition," said John Pescatore, vice-president at Gartner and the leader of a four-analyst team that published a brief on Microsoft's spyware motivations, "is that spyware problems have been making people defect from Internet Explorer.
Microsoft has to protect IE until a new version comes out, which won't be until Longhorn. It has to protect IE now, since any anti-spyware improvements to IE won't show until Windows XP SP3 is released, which won't be until the second half of 2005."
Longhorn, the next generation Windows, isn't expected until 2006 or 2007.
"Firefox is safer than IE when it comes to spyware," said Pescatore, talking about the prime competitor to IE in a renewed battle of the browser. "It doesn't do ActiveX, for one thing," he noted.
Concerns over spyware and other security problems are driving many enterprises and some consumers to think about or actually switch from Microsoft's IE to Firefox, Pescatore went on. "The Giant acquisition shows that Microsoft is taking this threat seriously," he said.
Firefox has been eating away at IE's dominant position since May. Since then it has captured four to five percent of the browser business.
Microsoft's march toward defending Windows and IE isn't driven by profits per se, said Pescatore, which will let it undercut offerings from anti-virus firms like Symantec, McAfee, Trend Micro, and others.
By mid-2005, Gartner analysts are predicting that Microsoft will release a combined anti-virus and anti-spyware product for enterprises, and price it at least 20 percent lower than the competition.
"Microsoft doesn't care about the revenue, it just wants to make it so that Windows doesn't look bad," said Pescatore, alluding to the constant barrage of media reports of spyware afflicting Windows' PCs.
"They won't give it away or dump it for, say, a dollar; that would present too many political problems. But since Microsoft won't be dependent on revenues from anti-virus or anti-spyware software, they'll go after market share."
Last year, Microsoft bought technology from GeCAD, a little-known anti-virus vendor based in Romania. At that time, similar concerns were raised by anti-virus rivals. So far, however, threats to their business haven't materialised. Microsoft, for instance, points users to third-party anti-virus products on its own website.
Although Microsoft's move into spyware is similar to last year's anti-virus venture, there are differences, said Pescatore. For one thing, Microsoft was waiting to acquire anti-spyware technology before really getting into the anti-virus business.
"You have to have a spyware component in anti-virus," claimed Pescatore.
The combination, he said, will make Microsoft a tough competitor for security firms. "I definitely think Microsoft will compete with the likes of Symantec," said Pescatore.
"On the enterprise side, there won't be much near-term impact," he added, noting that it will take time for Microsoft to integrate the acquired anti-virus and anti-spyware technologies into its own management systems, and that corporations already committed to a mainline security firm is unlikely to switch to Microsoft's first generation product.
But on the small business and consumer side, it'll be another story.
"Symantec has been seeing this coming," he said. "Look at what they've been doing lately, adding to the their enterprise offerings. They knew the consumer side was going to face Microsoft."