If there's one thing that worries software companies everywhere, it's to hear that "Microsoft's going to do it for free."

Most recently, Microsoft announced that it would stop selling its subscription-based PC security service known as Windows Live OneCare, which covered up to three PCs at $49.95 a year. Instead, offer a free security software product, code-named "Morro".

The security market is more important than ever, with security awareness at an all-time high--and security threats becoming more threatening than ever. But at the same time awareness is increasing, there's a bit of an industry shakeout. Venerable firewall maker Secure Computing for example, was just recently acquired by McAfee; and I would look for more acquisitions in this segment to come.

The question is however, what impact will Microsoft's free offer have on the security industry, and on VARs who offer security solutions? A big impact on the OEMs, but not as much impact on VARs, since Morro will target smaller computers and will address the home and SOHO markets. It's unlikely that it will be appropriate for the SMB market in any significant way, and these customers--prime targets of VARs--will still look to dedicated security companies to provide their solutions.

On the home user market however, there's another story. Home users love the word "free", mostly already run a Microsoft operating system, and like me, tend to be a little lazy and somewhat cheap. If Microsoft's going to give it out for free, fewer home users are going to bother subscribing to McAfee or Symantec, regardless of whatever technical superiority, if any, the latter two may offer. This is going to hit the bottom lines of the competition in a big way.

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