INDIA:  During the dot-com boom several Indian anti-virus companies were visible on the IT skyline but soon vanished. Only a few indigenous security vendors managed to hold their own. They are now gearing up to take on the MNC vendors in this space by investing in R&D, tapping the SMB segment and making international forays.

Two things that are ubiquitous in the contemporary PCs are 'virus' and 'anti-virus'. An increase in the usage of online applications and an ever-increasing tribe of Internet users are the most common factors for the growth in viruses, malware and spam.

Globally, several companies saw huge opportunities in this scenario where there was tremendous scope for deve­loping anti-virus and security solutions. Taking the lead amongst these were Norton, Symantec, McAfee, Kaspersky, Trend Micro etc.

An interesting phenomenon observed during this time that was the emergence of Indian anti-virus companies when the flood of malware and viruses began at the start of 2000. In fact in recent times, companies like Pune-based Quick Heal Technologies and Chennai-based K7 Computing and Rudra Technologies have managed to hold their own in face of the competition from MNCs. It will not be surprising to see more homegrown companies join their league, given the huge security market.

The driving factor

India is emerging as one of the fastest growing markets for security products. Recently Gartner claimed that the anti-virus software revenue was $4.9 billion in 2007, and accounted for 53.8 percent of the total security software industry. In fact, it pushed the worldwide security software revenue of $9.1 billion in 2007, which is 10.7 percent increase over the 2006 revenue of $8.2 billion. Gartner also projected that the worldwide security software revenue would be $10.5 billion in 2008, which is an 11.2 percent increase from 2007 and may cross $13.1 billion in 2012.

Though there are no market figures on how much the Indian market contributed or will contribute to this growth, there is no doubt that India ranks high when it comes to adoption of these solutions. The major driver in the Indian market is the increasing PC or rather laptop penetration.

According to Kailash Katkar, CEO and MD, Quick Heal Technologies, "The anti-virus market is growing at a fast pace in India, as PC penetration is increasing day-by-day. Since India is one of the fastest growing economies globally, it is bound to experience this spurt in the IT security business as well."

Another major key driver of anti-virus solutions is the massive computerization and increasing telecom density in the country. Mass IT adoption in enterprises, government and corporate sectors has created awareness about the need for anti-virus solutions.

This growth is giving an impetus for homegrown com­panies to enter this segment. Indian companies like K7 Computing, Quick Heal Techno­logies and Rudra Technologies were some of the early entrants in this business and have found good acceptance for their products amongst the masses.

Indigenous companies feel that are withstanding the competition from the stabilized MNC vendors only by offering unique services with innovative technologies.

What set them apart?

The dot-com boom might have brought the IT industry literally to its knees a decade ago. But it also paved the way for a number of Indian anti-virus companies to enter the business. However, most of them were unable to survive the dot-com bust.

Nashsoft Systems, N&N Systems, APCL Software Systems and K7 Computing were some of the Indian companies that had to exit the post dot-com debacle. Most of these companies were unable to sustain their business because they did not have the financial resources to ride the immediate downturn of the economy.

"The reason for the disappearance of various anti-virus companies which came in at the beginning of the IT revolution was that they could not keep pace with the advanced malware like polymorphic and metamorphic viruses," claimed Katkar of Quick Heal Technologies.

The MNCs, however survived the slowdown in the earlier years of the century because of their strong R&D capabilities and deep pockets that helped them weather the storm. And those Indian companies, which managed to hold their own could do so because they had done their homework well before entering this domain. Most of these companies too had invested well in R&D, with each product being worked and improved upon for almost six to seven years.

For instance, K7 Computing could be treated as a comeback kid, as it proved its ability in the Japanese market for years, and has four million installations among Japanese users. With this credit and confidence it has re-entered to the Indian market. But this time around it was careful to create a distinction for itself in this space by obtaining Checkmark Level I certification and Windows Vista certified from Microsoft, making it the only Indian anti-virus company to do so.

Similarly, Pune-based Quick Heal Technologies got its product certified by West Coast Labs for Checkmark Level II certification and won the Virus Bulleting 100 percent award for 17 consecutive times. Rudra Technologies has worked on its signature-based technology.

All the three companies feel that they are withstanding the competition from the stabilized MNC vendors only by offering unique services with innovative technologies.

Coping strategies

The question that arises now is whether these Indian anti-virus companies will survive the competition from their MNC peers. The indige­nous com­pa­nies are not worried about this.

According to J Vincent Paul, Executive Director, Rudra Techno­logies, competition is ubiquitous and by offering unique services, one can emerge as a winner. "We at Rudra tackle the competition by offering a unique product that can't be found anywhere in the country. With everyone working on the reactive techno­logy, Rudra works on the proactive technology in the anti-virus domain," Paul claimed.

More than an anti-virus, Rudra acts as a shield for the computer, without allowing any new viruses to enter the PC," Paul noted.

Other Indian players like K7 and Quick Heal also claim to counter the competition through their innovative technologies and not merely because they are priced lower than the MNC products.

Pune-based Quick Heal bets high on its ability to target the SME segment. Katkar felt that his company's major strength lies in its services and sales through the channel, which gives them an edge in the SME segment.

"We have three levels of support-e-mail support, toll-free number and branch-level support or personalized support, which MNCs lack. In the SMB segment, which bigger players have now started eyeing, our early entry acts in our advantage. Our unique market penetration point is the ease with which a user can use our software and adopt his own security policies," Katkar informed.

Quick Heal is also planning to come up with products catering to all enterprises. Even Rudra Techno­logies felt that there is a definite potential in the SME segment and has plans to tap the segment by rolling out a package for enterprises of all ranges. At the same time, these domestic companies are making a transition from a simple anti-virus company to a total security provider.

Going global

To gain an edge over their MNC peers, players like K7, Quick Heal and Rudra are also preparing for global forays. K7 has almost four million subscribers in Japan and is still growing at CAGR of 40 percent over the last three years.

Rudra Technologies plans to enter almost 17 countries including Malaysia, Singapore, and Hong Kong. Quick Heal is also looking at expanding further and it claims to have already being electronically exported to more than 50 countries.

Though the indigenous companies are leaving no stone unturned to mark their presence in the national security market, there is no doubt that they still have miles to go before they can catch up with the MNCs. But it is heartening to see them take the right steps in this direction.