Beyond Binary

(Credit: Ina Fried/CNET News)

There's a lot of ways to look at Microsoft's decision to abandon OneCare and come up with free antivirus software.

But I had to do a double take Tuesday night when I saw the Wall Street Journal headline on the decision: "Microsoft plans new spyware."

I saw the headline first on my phone, then went to the Journal's Web site, where the headline was featured on the main page. (See screenshot).

The article itself makes no reference to Microsoft creating spyware, and once one clicks on the story, bears the headline "Microsoft Plans to Introduce Free PC Security Software."

Microsoft's decision to offer free antivirus software puts rivals such as McAfee and Symantec in a tough position.

To be sure, those two--and other rivals--will be able to tout products that offer a broader range of features than Microsoft plans to deliver with "Morro" next year. At the same time, "nada" is a tough price to compete against.

That raises the question of whether those companies or others may look to antitrust regulators for help. We've put queries into those companies and also posed the antitrust question to Microsoft. I'll let you know what we hear back.

One thing in Microsoft's corner is the fact there are already free antivirus products on the market, such as AVG, though typically security vendors look to upsell consumers from low-cost or free products to higher-end ones.

Microsoft appears to be getting out of the paid security software business, at least on the consumer end. (Microsoft still plans to offer paid security products for businesses).

Also, Microsoft said it plans to deliver Morro as a free download rather than bundling it with the operating system--another move that could dampen some antitrust concerns.

It's unclear whether giving away software that others charge for will ultimately be enough to justify regulatory action. Although one antitrust lawyer predicts rival security firms will complain and that antitrust authorities will listen.

"Sure, there will be antitrust issues. They're just...daring the antitrust authorities to knock it off," said Daniel Wall of the San Francisco firm of Latham & Watkins. "This is an old issue, the notion of them giving away for free products that others sell and it is absolutely guaranteed to get the attention of the antitrust authorities in Europe, Korea, Japan, and other jurisdictions."

"They're incorrigible," Wall said of Microsoft.

Antitrust regulators in the U.S. have tended to focus on harm to consumers as opposed to competitors. Authorities in Europe and Korea have taken a broader view, taking action against Microsoft for actions deemed to hurt competitors, such as bundling its media player into Windows.

Both Europe and Korea have required Microsoft to offer versions of its operating system without certain components. In this case, though, Microsoft is not talking about distributing the antivirus code as part of Windows itself.

Representatives from Microsoft, Symantec, and McAfee were not immediately available to comment.

CNET News' Elinor Mills contributed to this report.

Update 4:45 p.m. PST: Here's what Microsoft had to say.

"We are focused on addressing the security needs of consumers," Amy Barzdukas, a senior director in Microsoft's Online Services and Windows Division, said in a statement. "We will, of course, continue to comply with any government rulings."

Update 6:25 p.m.: And we got comment from security firms McAfee and Sophos.

McAfee spokesman Joris Evers, asked if his company would raise an antitrust complaint over Microsoft's move, said: "It's too early to say anything about that."

Over at Sophos--which focuses on the enterprise market and so doesn't compete with Microsoft's consumer security products--Senior Technology Consultant Graham Cluley predicted antitrust issues would not arise.

"I am no expert on such things, but provided Microsoft does not bundle 'Morro' in with its operating system I would be surprised if there were antitrust issues," he said in an e-mail. "Anything which encourages more people to run antivirus has to be good news for all of us."

Asked if Microsoft would ever consider bundling the security features into Windows, Microsoft's Barzdukas said: "I can't foresee such a time."

Microsoft's decision to discontinue OneCare in favor of a new free antivirus product also means an end to Equipt, a $69-per-year subscription version of Office and OneCare that the company had been selling on the shelves of Circuit City.

A box shot of the Equipt product, which only briefly has graced Circuit City's shelves.

(Credit: Microsoft/Circuit City)

The copies will be headed out of retail stores in the coming weeks, although the subscription will run through some time next year. But since Microsoft plans to offer free licenses of Office to Equipt customers when their subscriptions end, those existing copies look like a pretty good deal for those who need Office Home and Student--the version of Office included in Equipt.

The company had announced Equipt as something tailored for so-called "tech benches"--services like Best Buy's Geek Squad. However, in the U.S., Circuit City was the only retailer that had started selling Equipt.

Microsoft had hoped to capitalize on the fact that people were already buying subscription security software to upsell them on Equipt. But with Microsoft now planning on giving away security software, that opportunity appears to have gone away.

"It was a very difficult decision for us to shut down Equipt but the fact of the matter is there is this higher order need (to offer free antivirus software)," said group product manager Bryson Gordon. Gordon declined to say how many Equipt subscribers there are, but said the product had met internal sales goals.

"The decision to end-of-life Equipt was not in any way based with sales performance," he said.

Equipt, initially known by the code name Albany, is unlikely to be the last Office subscription service, particularly as Microsoft moves into Web-based versions of its productivity software. The company has also sold prepaid Office subscription cards in some countries.

"What we really are going to turn our attention to is other places where we can build a software plus service offering of Office like we sold on a subscription basis," Gordon said.

As for existing Equipt subscribers, they not only will get a free license to Office Home and Student, they can also call and cancel their subscription, get a pro-rated refund and still get the copy of Office. Gordon said that Equipt buyers tended to be Microsoft's early adopters and said that "We really want to make sure they are taken care of."

Microsoft confirmed that it is planning a subscription service that combines the consumer version of Office with its OneCare security suite.

Code-named Albany, the product has a single installer that puts Office Home and Student, OneCare, as well as a host of Windows Live services, onto a user's PC. As long as users keep paying for the subscription, they are entitled to the latest versions of the products. Once they stop paying, they lose the right to use any version.

The product is aimed at consumers that want a simple way to have access to Microsoft's productivity suite and keep their computer protected, Microsoft said.

"There is a customer segment that really enjoys this always-on, always up-to-date aspect of the service," Microsoft group product manager Bryson Gordon said.

Microsoft is planning to introduce a limited beta version of Albany in the coming days, with the aim of launching the product commercially sometime later this year, Gordon said. The company still hasn't decided on how much it will charge or how the product will be sold, he said.

In talking about the product, Microsoft did not refer to Google Docs by name, but I have said a subscription product might be Microsoft's way of trying to find a more palatable way of charging for Office amid stepped-up competition from free and online rivals.

By tying the Office subscription to OneCare, Microsoft is linking the purchase to one of the few areas where consumers have shown a willingness to pay for software--security. In this way, Microsoft can make the pitch to those buying security software that, for some extra dollars, they can always have the latest version of Office as well.

Those who subscribe to Albany will also get several free Microsoft products pushed onto their desktop--including online document-sharing product Office Live Workspace, Windows Live Messenger, Windows Live Photo Gallery, and Windows Live Mail.

Gordon argued that having all the products installed at one time is seen as a plus by the segment targeted by Albany, but he agreed that some users may not be interested in having so many Microsoft products foisted upon them. Office and OneCare will continue to be offered in traditional ways, he added.

Other products may be added in over time, he said, and Microsoft could also try the Albany approach for other market segments, such as small businesses.

Microsoft said Thursday that it is buying Komoku, a Maryland-based company that specializes in software to detect rootkits.

As my ZDNet colleague Larry Dignan (who was more on the ball on this) points out, the move gives Microsoft's security unit the Department of Defense as a customer, along with the Department of Homeland Security.

Microsoft said it will build Komuku's technology into future versions of both its Windows OneCare consumer security products as well as Forefront, its line of security software for businesses.

The Komuku name and independent product line will go away, Microsoft said, but most of the 4-year-old company's nine staffers are joining the software giant. Microsoft didn't announce financial terms of the deal, which closed on Wednesday.

Meanwhile, ZDNet's Mary Jo Foley points out that Microsoft is moving forward with "Stirling," the next generation of its Forefront, which will add in further management capabilities.

Since November, Microsoft has been slowly rolling out an update to its Windows Live OneCare security software. Although the update was designed to bring in new features, such as the ability to monitor the health of multiple PCs, some say the new version has brought only headaches.

Robert Webb of North Carolina said he started having problems from the moment his software was upgraded in early December.

"My main problem has been that OneCare does not always start when the computer is booted," Webb said in an e-mail interview. "It has to be manually started."

Microsoft's online forums are buzzing with a host of complaints about the new version, with many people unable to get the software to work.

Microsoft confirmed that it is working on that problem.

"We are aware that some users are experiencing an issue with Windows Live OneCare when they start up the service after installing (version) 2.0," Microsoft said in a statement to CNET News.com. "The issue is being worked on and currently affects a very limited number of customers (about 1 percent of the install base), each of whom we thank for their patience."

In an interview Thursday, Microsoft lead product manager Larry Brennan said that, in total, the problems aren't causing a significant disparity compared with users' experience with the older version.

"We do monitor the overall status of the service," he said. "We can see that the servicing statistics for 2.0 are comparable to the servicing statistics for (version) 1.6."

Brennan touted the new features, such as automated printer sharing and centralized backup, as key improvements and said that with any upgrade, there are bound too be some people who have problems. Brennan said Microsoft is about halfway through migrating OneCare users to version 2.0 and that the company is continuing to automatically upgrade customers, despite the complaints.

OneCare, which was introduced in May 2006, is Microsoft's first entry in the consumer antivirus software business and competes with consumer software from Symantec, McAfee, and others.

Stephen Boots, the Microsoft Most Valued Professional who moderates the OneCare forum, has been trying to address many of the issues online, but has been suggesting those with other issues contact Microsoft's customer care.

"There were too many problems with the v2 upgrade and too many remain now," Boots wrote in a post on Friday.

For Webb, the problems have shifted his OneCare experience from positive to negative.

"I liked OneCare before these problems appeared because it was hassle free and not a resource hog," said Webb, who has been using the program for a year and a half and renewed his paid subscription last July.

Update: A Microsoft representative said on Friday that the company is planning to push out an update to version 2.0 on January 31 that it hopes will fix many of the problems that users have been encountering.