Monday, September 3, 2007

Malware Drives 4% of PC Sales?

Last week, Rich Cameron, Authentium's COO, pointed me to an article in the latest Consumer Reports magazine.

The article makes an astounding claim, based on internal research - that US consumers and businesses *replace* 1.3m PCs every six months because of viruses and spyware.

"Based on projections from our survey, virus infections prompted 1.8 million households in the survey to replace their PCs in the past two years and spyware infections 850,000 in the past six months." - Consumer Reports, September 2007

Consumer Reports unfortunately didn't take the next step - i.e. determine the economic cost/value of these malware infestations. So let's start by annualizing the numbers:

1.8m / 2 years = 900,000 PCs replaced per year, in the US, because of viruses. 850,000 x 2 = 1.7m PCs replaced per year, in the US, because of spyware. QED: Total PCs replaced each year in the US because of malware: 2.6m.

The total number of PCs sold in 2006 in the US, including desktops, laptops and ultralights, was approximately 66m (IDC), or around 28% of worldwide sales. Assuming Consumer Reports is correct and malware was responsible for 2.6m of those sales, this means approximately 4% of all PCs sold last year in the Unites States were purchased as a result of these infestations.

Which further means that, at roughly seven hundred and fifty dollars per sale (NYT), retailers pulled almost $2bn in additional sales through their cash registers last year - as a direct result of malware.

Now, I'm not sold on the Consumer Reports numbers - they sound high to me - but I am intrigued by the economics. The next time I'm at Circuit City, or Best Buy, you can bet I'm going to ask around and see if there is support for this argument.

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