Friday, June 14, 2024

Analysis: Microsoft Real Winner in Alliance with McAfee

Datamation content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

The share price of security services ASP jumped 50 percent on
Tuesday, May 22, when it announced a strategic alliance with Microsoft. But
perhaps it was Microsoft shares that should have soared on the news, instead of
creeping up just 2 percent.

Under the alliance, has signed up to integrate Microsoft.Net
technology — in particular the Hailstorm Web services it announced recently —
into McAfee’s Web-based security offerings. The two companies will also carry out
various joint marketing and promotional activities. (See related news story, McAfee
Gets Passport to Microsoft’s .NET

McAfee’s first move will be to develop new security services using the existing
Passport user-authentication service, providing single sign-on and registration
across multiple Web properties. Additional Hailstorm services will be incorporated
as they are made available, such as notification, which will enable McAfee users to
receive automatic alerts about security and virus threats wherever they happen to
be working (for those who like that sort of thing).

Traders started buying up McAfee stock so avidly because, at first
sight, the relative user numbers of the two companies seem to stack up in
McAfee’s favor. The joint promotion agreed as part of the deal will theoretically put
its services in front of 160 million users signed up for Passport, whereas McAfee
brings just 920,000 users of its own to the table.

Quality, Not Quantity

But quality counts more than quantity in the newly value-conscious Web services
market of 2001. Most of Microsoft’s 160 million Passport accounts are inactive,
many of them a side-effect of registering for free e-mail on Hotmail, others opened
for one-off purchases or registrations on third-party consumer services as a result
of cross-promotional deals.

That user base of 160 million is hardly likely to
translate easily into instant revenues for McAfee: The success rate for free services
converting their casual consumer registrations into paying subscribers doesn’t even
struggle up to the 1-percent level, as many dot-coms can testify from recent,
bitter experience.

All of McAfee’s 920,000 users, in contrast, are already signed up as active, paying
subscribers. What’s more, McAfee is assiduously promoting the Web services
message to them on an almost daily basis.

In a consummate demonstration of one
of the major advantages of Web services for both providers and users, McAfee last
week simultaneously upgraded its entire user base to a new version of its
application delivery software — which, since part of the code executes locally,
meant performing an automatic remote installation on 920,000 user devices. The
upgrade has introduced a new, unified presentation for its complete portfolio of
services, making it even easier for McAfee to promote new offerings right at the
user desktop — along with its celebratory tagline: “ Online Services —
The ASP Advantage.”

Not only does McAfee have the user base, it also has the talent and experience at
developing and marketing Web services to be a powerful ally for Microsoft in
signing up paying users for Hailstorm. This may indeed have become a factor
that traders took into account on Tuesday. For while McAfee’s 50 percent share
price rise added $21 million to its market capitalization, Microsoft’s 2 percent gain
increased its market cap by a whopping $8.2 billion. It all depends on which way
you look at the numbers.

Phil Wainewright founded and now serves as a consulting analyst. He is based in London and can be contacted at

Subscribe to Data Insider

Learn the latest news and best practices about data science, big data analytics, artificial intelligence, data security, and more.

Similar articles

Get the Free Newsletter!

Subscribe to Data Insider for top news, trends & analysis

Latest Articles