A Look At Symantec’s Opportunity In The Mobile Security Market
The Consumer Antivirus business is the largest operating segment for Security Software developer Symantec (NASDAQ:SYMC), contributing to approximately 42% of its overall enterprise value. The division consists of revenues recognized from the sale of new licenses and subscriptions for the company’s flagship brand, Norton. However, Symantec’s Norton brand witnessed some stagnation in top line over the past few fiscal years. Also with the division accounting for more than 40% of its overall enterprise value, the company’s overall business performance has dropped in recent times. Symantec’s Consumer Antivirus revenues for FY11, FY12 and FY13 stood at $1.95 billion, $2.10 billion and $2.11 billion respectively.
In an attempt to boost revenues, Symantec realigned its business offerings with the addition of various new areas of growth such as mobile security and data center security solutions in its product pipeline. This realignment also resulted in a change in the company’s reporting format. The new User Productivity and Protection division, which includes the erstwhile independent Norton line of products, reported revenues of $2.87 billion in the recently concluded FY14. Comparatively, FY13 User Productivity and Protection revenues stand at approximately $2.98 billion.
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Mobile Security And BYOD Should Revive Growth In Consumer Antivirus Division
The most important reason for Symantec’s stagnation in the Consumer Antivirus division is its limited footprint in high growth areas of mobile security and BYOD (bring your own device) security solutions. Smartphone proliferation globally has expanded rapidly over the past three years, with Gartner predicting the total number of smartphones at 968 million compared to 680 million from a year ago. [1] This represents a 42% increase over 2013, with most of the growth coming from emerging markets. India reported the highest growth in smartphone unit sales at 166% in 2013, followed by China at 86%. [1]
The over 40% growth in smartphones has also contributed to a 44% growth in total transaction value over mobile platforms globally in 2013. [2] According to Gartner, mobile platform transactions are expected to grow at 35% annually between 2012 and 2017, reaching approximately $721 billion by 2017. [3] More importantly, markets of Africa and Asia-Pacific have contributed to a higher share in mobile transactions and this trend is expected to continue. Gartner estimates Asia-Pacific and Africa to account for approximately $165 billion and $160 billion of the total $721 billion transaction value for 2017. [3]
The rapid increase in smartphone device penetration, particularly in emerging markets, combined with the outpaced growth in mobile transactions and payments in these regions presents a huge opportunity for cyber-criminals. 2013 witnessed the largest number of cyber attacks, with the total loss associated with these attacks topping $110 billion, according to Symantec. Moreover, the cost per cybercrime victim increased 50% in 2013 compared to 2012 due to more sophisticated attacks such as ransomware and spear-phishing. A majority of these attacks have been a result of insufficient security on consumer’s mobiles, where sensitive credit card information and other data have been targeted, following the spike in m-commerce activities.
In addition to mobile security, solutions for the BYOD trend should contribute to a revival in revenue performance for Symantec’s consumer antivirus business. With PC and laptop sales continuing to decline globally, and employees increasingly utilizing their own devices for work-related activities, the costs associated with cybercrime attacks on these employee devices should have a sizable impact on businesses. Over 50% respondents from a Forrester survey reported that mobile device security, data breach security, mobile data security and mobile application security are the four areas that need immediate attention from a BYOD perspective. We believe mobile security and enterprise security solutions to safeguard the BYOD trend should be the two areas of high growth for Symantec and the overall consumer security market.
Currently, Symantec’s offerings such as App Center, Mobile Security and Norton Zone cater to corporate enterprises for implementation. However, given the gigantic increase in mobile transaction value expected going forward, offerings such as Norton Mobile Security that help secure mobile devices against malware programs will add a lot of value to the stagnant Consumer business unit for Symantec.
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- Gartner Says Annual Smartphone Sales Surpassed Sales of Feature Phones for the First Time in 2013, Gartner Newsroom, February 2014 [↩] [↩]
- Gartner Says Worldwide Mobile Payment Transaction Value to Surpass $235 Billion in 2013, Gartner Newsroom, June 2013 [↩]
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