Amazon and Symantec link-up on cloud offering

Symantec (known for its Norton antivirus security software) is capitalizing on the shift to cloud computing / storage by offering two kinds of Symantec software, storage software and security software for businesses, as a service to companies through Amazon’s Elastic Compute Cloud (EC2).  This means that businesses can pay Symantec a monthly fee to provide security remotely on their “cloud” resources instead of purchasing Symantec software for use on in-house servers.

“Clouds” consist of groups of virtualized server / storage resources that are used by businesses instead of building up in-house servers / storage.  The rationale is that clouds give companies greater flexibility to use only the resources they need and can help save on IT overhead (facilities, personnel).

Amazon’s EC2 is an example of a flexible cloud offering serving businesses.  Symantec, through its software-as-a-service, is offering similar flexibility for companies by making it easier to manage their software.  If a growing portion of Symantec’s software is delivered as a service rather than sold, it could impact Symantec’s business in at least two ways:

1 – Customers become less “sticky” – Symantec customers may find it easier to switch to alternative software-as-a-service providers while new potential Symantec customers may find it easier to try out Symantec offerings

2 – Customers always receive the latest software – Since the software is delivered as a service, this could mean that Symantec is always delivering the latest version to subscribers eliminating incremental revenue from upgrade cycles.  Symantec may mitigate this by adjusting service pricing to incorproate upgrades

Currently, the cloud business for Amazon and the software-as-a-service business for Symantec are small, constituting only 4% of each company’s respective value.  However, the combination of Symantec’s Storage Software and Security Software for Businesses segments is much larger and could be impacted by the shift from software sales to software-as-a-service.

How much of Symantec’s value is the combination of Storage Software and Security Software for Businesses segments?

A. 30%

B. 40%

C. 50%

D. 60%

Make a selection above to see the answer.