PCR sits down with senior execs from security software vendor Kaspersky Lab to discuss its big retail push, revenue share scheme, fierce competition and how the ‘Internet of Things’ is shaping the sector…
Security software is shifting, with more customers looking for protection for their tablets and smartphones. What kind of uptake are you seeing there?
Lee Sharrocks, UK and Ireland consumer and SMB sales director: We’re paving the way for people to use multi-device software across PC, Mac and Android. I think the really interesting question for this year that none of us can answer is whether we reach the tipping point on Android outbreaks. There’s lots of discussion about the mobile threat, and actually if you look at the corporate mobile threat – so BYOD and all the rest of it – it’s taken very seriously. But the uptake on mobile security software from members of the public is low. Part of our main emphasis over the past year has been educating people about why it’s important.
Have you seen more retailers offer digital software downloads?
Lee Sharrocks: Retailers have a mixed pot of stuff now – people coming into stores for physical goods, people ordering online but really buying physical or using click and collect, then you have the pure download business.
Dixons Carphone and John Lewis are good examples of retailers that have gone over to POSA in terms of how they’re offering software, but other firms are almost so busy doing their day job, it’s a big shift for them. So uptake is a lot slower than I thought it
would be. What we’re being asked to do is provide ESD (electronic software download) for certain partners. If you look at PXS – a new distribution partner for us – we are piloting a project with them to look at ESD for our resellers.
Do you currently offer revenue share outside of this new scheme?
Lee Sharrocks: No. We constantly review the distribution network we have for the consumer products in the UK (B2C disties Entatech, Exertis, PXS and TechData; B2B disties Arrow, Wick Hill and Ingram Micro).
With PXS we’re endorsing their renewal share programme for Kaspersky products, and it’s a pilot, because I’m very keen to understand if that gives us more value into the marketplace for those resellers, and a longer term relationship with them. It has a lot of advantages in terms
of cash flow, and if you’re a sole trader or smaller company, then being able
to pull a licence down the wire and just sell it in real time is convenient.
We’re not trying to suddenly spike our volumes with those resellers, we’re trying to build loyalty so that over a number of years they continually come back to Kaspersky. As it’s a pilot, my guess is we won’t know what the uptake looks like until three to six month at least.
If it works, would you look at introducing a broader renewal programme across your distribution partners?
Lee Sharrocks: Yes – there’s no reason why we wouldn’t. But we need to get a proof of concept on it at the moment. What I envisage happening is if it works via PXS, we’ll probably take the whole
thing in-house and offer it out to all of our partners on the same terms.
Once you start discussing digital, the fear for the channel is that all of that business will be taken direct. But we’ve got no intention of doing that. Will we continue to grow our own online business? Yes, but actually growing the channel business is also key to what we do.
How have your new 2015 branded products been received so far?
Lee Sharrocks:Multi-Device has seen good uptake in terms of selling it across all of the channels. Pure anti-virus has probably had its day now in that standalone format. We still offer it via our online channel but not through our physical channel now.
At the moment Internet Security is still our most popular title. What we’re seeing with Total Security is we’re starting to gain some traction. We’ve renamed it so people understand what it is.
We launched in WHSmith just prior to Christmas, and we’re doing other stuff with other retailers including Argos which will come out over the next few weeks. Unlike some of our competitors, we’ve been in retail all the way through, and we will continue to be because fundamentally that’s how we grew our consumer business.
2014 was a big year for Kaspersky – you moved offices, upped your focus on enterprise and launched new products. How was 2014 for the balance sheet?
Kirill Slavin, UK and Ireland MD: The year hasn’t been closed just yet, but roughly I’ve been told growth was the same as it was in 2012 and 2013 – around six or seven per cent growth, give or take. It’s definitely more than market growth.
Last year was also awash with big security stories from the Apple iCloud breach to the Sony Pictures hack. Why do you think there were so many?
David Emm, principal security researcher: What we’re seeing is computing becoming much more mainstream, and as we’re more reliant on it I think the use of computers for nefarious ends is no longer a novelty.
With the Sony Pictures hack, it’s more personal data being exposed and it’s quite scary that they’re still not encrypting stuff they should be. The most worrying aspect about it is we had a group threatening to take physical terrorist action.
How do you expect the threat landscape to evolve?
David Emm: I think we’re likely to see a convergence of the APT (advanced persistent threat) side with commercial type attacks. I think we’ll see more point of sale and ATM attacks.
Do you plan to protect IoT devices and connected homes in the future?
David Emm: Absolutely. Developing solutions that third parties can integrate is really important. I think as connectivity grows, it will always be something that we as a business look at and try and work out where we can be of use, and where we can create something that solves some of the issues that spring up.
And while some of the protection of connected devices and the Internet of Things is going to involve back-end protection, there’s still going to be an end-point element. If it’s an app controlling my door or the locks on my car, there’s still going to be an aspect of people being involved and actually securing that device.
Making people aware of the dangers is important too. Imagine a fault with smart smoke alarms. And there may be other things we’re not conscious of, especially as they become part of the fabric of our life.
The security software sector is fierce. Has it been more competitive dealing with your rivals this past year?
Lee Sharrocks: I think it’s fairly brutal. It’s one of the most competitive marketplaces in IT because there’s a very high standard of product.
We have seen some changes in some of our competitors’ strategies, but I think that’s all noise; you’ve got to focus on your core business model – and ours is channel. It’s now paying off for us, because whereas other companies have been deciding what their strategy is, we are now starting to get long-term relationships paying off and that’s why we are winning new business.
What are your hopes and ambitions for 2015? How do you expect the security sector to change?
Kirill Slavin, UK and Ireland MD: First, some regulatory changes in this country are long overdue. Banks should report breaches – full stop.
In terms of changes in philosophy, the bigger the perimeter you want to protect, the harder it is to protect. So if I want to protect my cat’s pictures on Facebook, that makes the perimeter very wide. If you compare bathing suits in the ‘20s to the bikinis – and I’m afraid to say mankinis – of today, they’re very different. I think a sort of depth change in our understanding of privacy is long overdue.
Thirdly, insurance firms are realising premiums must depend somehow on the degree of protection, including cyber protection.
Most research firms forecast slow growth of maybe two or three per cent. But we have pockets of high growth like DLP (Data Leakage Protection) for example, which is predicted to grow at say 30 per cent. And we are trying to adjust our business, so that means more emphasis on enterprise. There are pockets of market growth there.
Left to right: Kaspersky UK’s MD Kirill Slavin, sales director Lee Sharrocks and security expert David Emm