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Grisoft spreads software by viral marketing

Firms hits download record as Web threats rise in complexity

By Paul Voosen
Staff Writer, The Prague Post
October 24th, 2007 issue

Grisoft, a software company based in Brno, south Moravia, has a counterintuitive strategy for distributing its most popular product, AVG Anti-Virus: Give it away.
Since launching a free, fully functioning version of its software in 2000, Grisoft has seen use peak worldwide. The company most recently announced Oct. 17 that AVG Anti-Virus has become the most popular program on Download.com, one of the Internet’s largest software sites, with more than 41 million downloads.
But popularity doesn’t always lead to profit, and Grisoft is looking to convert the goodwill it is banking into future paying customers, says J.R. Smith, the company’s chief executive officer.
“We see [the free version] as a form of marketing,” he says. “It’s extremely viral — the upkeep costs are made up by the word-of-mouth it gets us.”
Computer security is a burgeoning field, its growth hastened by the multitude of pitfalls coming from increased Internet dependence. Beyond viruses, there are programs devoted to filtering junk mail, blocking fake Web sites used to steal bank information and establishing firewalls to prevent hackers from taking over a computer’s controls.
Despite this variety, a large part of the security market remains in the hands of two American companies, McAfee and Symantec, says Ruggero Contu, a security analyst at the IT research firm Gartner. In particular, these companies dominate large-scale computer networks, including big business and education.
Companies like Grisoft must instead find room to grow in the consumer market, Smith says. For example, spreading the AVG name has led to two million paid downloads of its deluxe antivirus program, called AVG Anti-Virus Pro, which retails for $38.95 (750 Kč).
Grisoft gets most of its revenue from the UK and the United States, Smith says. Part of this localized success is purely a matter of language, as AVG’s free version comes only in English, though the company promises more languages in the future, including the recent launch of a Japanese version.
Another growth strategy employed by small vendors is selling their products directly to Internet service providers, which then pipe the program to their customers, according to Contu.
“This has become a good way to do business,” he says. “This is giving smaller vendors a good way to prove the effectiveness of their technology, a better opportunity to compete with the establishment.”
Grisoft will be following a similar tack, says Smith. He joined the company earlier this year, lured by the firm’s new majority owners, Enterprise Investors and Intel Capital, which bought 65 percent of the company in 2005 for $52 million.
Viral evolution
The causes and actors behind Internet attacks have changed since the early part of this decade, according to Karel Obluk, Grisoft’s chief technology officer.
“Viruses are not about ego anymore,” he says. “Virus makers don’t look to create huge slowdowns or wipe hard drives. They’re trying to make money. They may limit the virus to taking over 5,000 computers to extract information or set up ‘bot nets’ to attack companies or mail spam.”
By limiting the number of infected computers, viruses become harder to identify and stop. And if that’s not bad enough, malicious coders have also developed techniques that allow viruses to be polymorphic, meaning that the viruses subtly evolve when they replicate, doubly complicating tracking.
Many of these viruses and attacks come out of the former Soviet Union, Smith says, where organized crime has set up programming divisions that mirror the capabilities and organization of legitimate software companies in the West. These programs are then sold to the highest bidder.
The complexity of threats has prompted Internet security companies, including Grisoft, to offer integrated software.
“All of the major players have been working toward offering suites,” Contu says. But “it’s not just a matter of adding up these layers and you’ll be successful. You must be able to integrate these different layers and make sure you don’t have false positives.”
That’s the difficult path Grisoft has to cut, Smith says. While everyone wants to avoid the mountains of spam avalanching into their inboxes, should a program flag one important letter as junk the user will caterwaul —regardless of how many other threats have been prevented.
“There’s always a risk of false positives,” he says. “Engineers have to walk a fine line between accurately marking spam and not misidentifying important information. Consumers will only tolerate so many mistakes.”
And what about computer users who decide to go it alone, trusting their own surfing savvy? While it may remain possible to stay virus free, the threats will only continue to multiply.
For one example, look to Estonia, a country advanced in its Internet use — it has even held national elections over the Web. This May, anonymous hackers brought the country’s infrastructure to its knees, crippling many essential services, Obluk points out.
“It was an organized attack,” he says. “It was a demonstration of what can be done to a country. We don’t know who did it or why — and why it suddenly stopped.”

Paul Voosen can be reached at pvoosen@praguepost.com


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