An Analysis of Trend Micro Systems - Who They Are and Where They're Going

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An Analysis of Trend Micro Systems - Who they are and where they're going
P.Hayes - February 7th, 2000

Vendor Genesis

A former Hewlett-Packard engineer, Steve Chang, the present CEO of Trend Micro, founded Trend in 1998. Trend Micro's first anti-virus products were released in early 1990 with marketing primarily focused on Japan, Taiwan, and US markets. Trend has evolved its product line since then, and its present approach to virus protection is server-centric, using a top-down methodology.

Trend is publicly traded in both the United States (Nasdaq: TMIC) and Japan (Japan OTC: 4704). Trend Micro boasts a Market Capitalization of $14 Billion (USD) and has been trading on the Nasdaq in the low twenties following a 3-1 stock split. Trend Micro generates over 90% of is revenues from product sales and less than 10% from services. Of the 90% product sales generated by Trend, 80% is accounted for through Channel Sales with no Exclusive Channels. Trend selects resellers geographically, assuring a competitive advantage and leads for the select resellers in any given region.

Trend Micro has over 750 employees and has the largest virus research team in the anti-virus technology arena. Trend is also the largest anti-virus vendor in the Pacific Rim and is growing steadily within the US market. According to IDC, 1998 revenues for the anti-virus market were 1 Billion (USD), up a staggering 28% from 1997 anti-virus software revenues.

The recent 'Melissa' virus, which affected more than 300 organizations within 16 hours of its release, had a serious impact on the technology markets' view of anti-virus software. During the first half of 1999 alone, viruses have wreaked havoc on the Internet and corporate networks, causing over 7 Billion (USD) in damages.

Trend Micro views its major competitors as Network Associates and Symantec. In 1998 Network Associates at 44% had the lion's share of anti-virus software revenues, Symantec had 25%, while Trend had 9%. Trend produces a complete array of anti-virus software using a server centric viewpoint. Trend Micro's products include e-mail components, gateway components, desktop components, and central management utilities. Trend Micro updates virus pattern files on a weekly basis, or on an as-needed basis when dangerous viruses strike.

Vendor Strategy and Trajectory

Trend Micro is attempting to gain a greater percentage of the anti-virus software market share through a combination of robust platform support, partnership alliances, and increased human intelligence within its virus research team. Trend is looking to increase the number of ScanMail resellers through establishing additional strategic partnerships.

Trend currently supports Windows NT, Novell Netware, Linux, HPUX, AIX, IBM OS/2, IBM AS/400, and IBM S/390. Trend is also moving to an ODBC compliant architecture, which will support, text, SQL, and Jet database formats for their product line. Trend has partnered with Lotus, Cornerstone Systems, Check Point, Cisco, Axent, ISS, HP Covision, IBM S/390, Lucent , Microsoft, kforce Consulting, and

Trend is also looking to evolve from a product to a service with service partners who are ASPs providing e-mail hosting, which will then be coupled with the ASPs service offering. These service partners include, Infonet, Inernoded, US West Hosting Solutions, and UUNET. Trend will continue to develop additional partnerships to allow a strong entry into the service provider space.

Vendor Strengths

Trend Micro's strengths lie in its server centric anti-virus software packages. This is due not only to the ease of configuration and implementation of its products and the speed at which they work, but also to the advanced anti-virus technology behind it. With the largest anti-virus software research team in the world, Trend is able to produce virus pattern file updates instantly; thus protecting its clients from potential disaster while attracting additional potential buyers to its package.

Trend also offers an anti-virus management console, believing that centralized anti-virus control is the only form of control. Trend produces a component of an enterprise wide anti-virus protection system for each file/print, email server, desktop, or gateway on your network.

Vendor Challenges

Trend's primary challenge is to expand its market share within the anti-virus software arena. Through a series of partnerships and alliances they are heading in the right direction. Trend is doing well in the server market, but has less than 5% of the desktop anti-virus market. Symantec and McAffee have a significant foothold on the desktop arena, which may make that particular segment of the anti-virus software market almost impenetrable in the short term.

Name recognition is another key factor affecting Trend today. To overcome this obstacle, Trend is continually attending conferences and widening its channel sales force, in addition to the partnerships and service partnerships, which are currently in place. Trend began its sales in Asia. It has a foothold on the Pacific Rim, the source of the majority of its revenue, where its name is well known.

Service and support represent a challenge to Trend as its installation base defies geographical boundaries, and its surprisingly rich platform support adds to support complexity. Trend intends to provide additional training to its support staff, while offering incentives to overcome these issues.

Vendor Predictions

Expect to see Trend Micro double its market share in the anti-virus field to 20% by the 4th quarter of 2002. Trend will rise to the top of anti-virus gateways in use on the Internet.

Trend Micro has recently struck a strategic alliance with Sendmail, which has 75% of the 8,000 ISP's mail routing systems. If successful this alliance will enable Trend to be able to sell to up to 6,000 ISPs for gateway and email anti-virus protection.

Some have referred to Trend Micro as " The future anti-virus backbone of the Internet" and the alliances Trend has made will help propel it to the next level.

Vendor Recommendations

  • Trend must continue to increase name recognition through a series of partnerships, alliances, channel sales, presence at trade shows, and press releases.

  • Trend must also improve the level of technical support by breaking through geographical boundaries, thus ensuring its clients the best support for its particular product, regardless of location.

  • Trend Micro must continue to improve the ease of installation and configuration through its research and development departments; thereby making the product more desirable to those clients who may not have funding to pay for external contractors.

  • Trend must also improve on the existing security levels contained within its products, to eliminate the number of "found and recorded" viruses finding their way into the wrong hands.

User Recommendations

Trend Micro offers one of the best server based anti-virus software solutions in the industry today. If you have Lotus Notes, Microsoft Exchange, cc:Mail, MS Mail, or HP Open Mail and do not have an anti virus server in place, Trend should be included on the short list for enterprise wide email virus protection.

Trend Micro (Nasdaq:TMIC) is the first anti-virus server to reach Checkpoint Level 1 certification (for Microsoft Exchange). ScanMail, through its combination of enhanced anti-virus processing of both inbound and outbound mail, coupled with its content filtering, should be viewed as a leading anti-virus server product and should not be overlooked when implementing an anti-virus protection program.

Trend protects beyond email, offering Interscan for gateway scanning; a central control model called Trend Virus Control System (TVCS) for management; OfficeScan for the desktop; and eDoctor, which when coupled with TVCS enables global alerting and diagnostics.

Simply stated, Trend probably has an anti-virus solution for your environment. If you are making a technical choice regarding anti-virus software implementation, make sure to look at Trend Micro.

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