China enterprise holds key to a new Trend

Anti-virus vendor Trend Micro has been busy with the Enterprise server market. CEO Steve Chang talks about the company's strategy in China.

SINGAPORE--The recent outbreak of the Nimda worm has shown just how vulnerable systems are to threats from cyberspace, especially when these systems are manned by administrators who are already overburdened with other duties.

Simply enforcing proper anti-virus policy and pattern updates across an enterprise could well be a full-time job in itself, especially when a new worm or virus unleashes itself across the Internet.

To make the system administrator's job easier, anti-virus vendor Trend Micro has focused on developing anti-virus solutions for enterprise. The company's virus control system (VCS), for instance, is a Web-based management console that lets administrators control server-based anti-virus programs from a centralized location.

In a review of the Trend Micro product line, Gartner analysts Brad Henson and Kristen Noakes-Fry observed that the vendor "has kept one step (sometimes two steps) ahead of the world's anti-virus and malicious code purveyors by delivering a strong and comprehensive suite of software to the marketplace."

And in a study of the anti-virus software market earlier this year, research group International Data Corp (IDC) named Trend Micro the fastest growing anti-virus vendor. The study also forecast that growth would come increasingly from the server and subscription markets, instead of the consumer market. IDC estimates that the server and subscription sectors will account for a combined 70 percent of the anti-virus business in 2005.

This is certainly good news for Steve Chang, CEO and founder of the Japan-headquartered Trend Micro. Chang noted that with less than 10 percent of his company's revenue from the previous year coming from the desktop market, it is focusing on the growing enterprise space.

He also has an ace up his sleeve--the large China market, already a magnet for many vendors and especially attractive now with its imminent accession to the World Trade Organization in November.

China: Building strategic alliances
Chang is confident of Trend Micro's performance in the China market for several reasons. For one, the local competition is focused mainly on the desktop market, leaving him free to fill in the enterprise anti-virus space.

According to IDC, China is now Asia's largest server market, following 76 percent year-on-year growth in 2000. Chang believes that the country is only recently realizing how important it is to have enterprise-level solutions.

Trend Micro's strategy lies in building good service and a support team, as well as in tying up with strong partners in the server space. It announced earlier this February that it was partnering Legend, one of China's largest PC makers, to develop an anti-virus/firewall server.

The other strategic positioning the company is adopting involves tying up with Internet service providers (ISPs) in the Chinese market. Already, Trend Micro has sought out ChinaNet, CNC and China Telecom in order to target users with bundled services, providing the ISPs with value-added services.

The China Internet Network Information Center (CINIC) said that as of January this year, China had 22.5 million Internet users, compared with fewer than 9 million in December 1999. According to Chang, Trend Micro's alliance with Chinese ISPs will leverage on the recent increase in broadband penetration in the country.

However, one problem looms large in the China market: software piracy. According to a recent Reuters report which cited the Business Software Alliance (BSA), 94 percent of the software installed in China last year was counterfeit. This was higher than the 91 percent rate a year earlier, said the industry group, which is made up of several vendors that see piracy as detrimental to their business.

To counter this, Trend Micro has adopted a new business model. Instead of selling its software at retail outlets and providing free upgrades, it now allows users to download the software free but charges for updates using a subscription-based model.

Chang noted that the strategy has worked well in both Japan and the US. However, it was unpopular in other parts of the world. "Perhaps because there were alternative solutions there," he hazarded.

For China though, Chang is upbeat. He claimed that Trend Micro's biggest competitors, Symantec and Network Associates/McAfee, are not established enough to pose a serious threat to the company's market share in the region.

"Trend Micro's goal is to develop better technology and service," said Chang, who believes that building more "intelligent" security technology would help make the IT manager's job easier. To attract more users, anti-virus software and other security solutions need to be deployed with as much automation as possible, he added.

Recent virus attacks have also highlighted the need for broad-based anti-virus solutions. The Nimda worm, for instance, spreads through a variety of means--through email as an attachment, by infecting unpatched Microsoft IIS servers, through the Web pages of the infected IIS servers, and through open network shares in the Windows environment. The multiple points of entry that the worm employs means that a stand-alone firewall or desktop anti-virus solution isn't enough to prevent attacks, especially in the case of large companies across an open network.

Thus central control, ease of deployment across a network, manageable policies, as well as a centralized reporting system are crucial to the effectiveness of any enterprise-level anti-virus solution, said Chang.

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