1. CASE PROBLEM: AV Corporate initiated PC Anti-Virus 2.

0 Project in May 2007; by July

2009, the company completed research and development and made the announcement of the
new version to the market. However, shortly thereafter, Microsoft announced that they will be
releasing a new operating system. This instigated fears from the companys owners that the
new product will have no market.
The managers are faced with two options that could possibly provide resolution to the
matter: Should the AV Corporate delay the release of PC Anti-Virus 2.0 until it is compatible with
Microsofts new operating system, or should they release the product and offer software
upgrades in the future to make the program compatible with the newer Microsoft Operating
System?
2. POINT OF VIEW: The case will be evaluated from the point of view of Connie Nicdao, the
head of the marketing team. As the leader of the marketing department, she would have
expertise on anti-virus as well as PC consumer market buying behavior to determine the
success of the product in the market;, and since she is working with JM Montelibano, she also
has access to relevant information with regard to the PC Anti-Virus 2.0 Project. Lastly, as the
head of the marketing team, she has the credibility to influence the decisions of the company
executives.
3. ANALYSIS:
Microsoft Windows: Majority of desktop computers operated on a Microsoft Windows
operating system (refer to Annex A). Microsoft dominated the market with close to 90% market
share (including XP, Vista & 7)1. As such, majority of systems and applications are developed to
perform on the platforms that are made available by Microsoft, and AV Corporate is no
exception. In 2009, over 60% of the market used Windows XP. To date, it is still considered as
the most stable operating system from Microsoft. However, its successor, Windows Vista, did
not perform as well. While the public expected enhancements and improvements form its
predecessor, Windows Vista had compatibility issues, security issues, and it was slower and
more expensive. Windows Vistas performance was so poor that a third of new PCs with the
operating system downgraded to Windows XP2.
Microsoft received so much criticism from Windows Vista that the market is more
skeptical of the company. With Microsofts announcement of a new operating system to be
released in 2009, it is uncertain that the market will be receptive to the new platform, and quickly
dispose of their existing operating systems for the new one.
PC Anti-Virus 2.0 Project: PC Anti-Virus 2.0 is a computer software designed to prevent,
detect and remove malicious software. Phase 1 of the project began in May 2007 from a
proposal from the companys core group of technical leaders. The research phase of the project
took 12 months, and by May 2008, the company advanced to Phase 2 Development. This
stage took slightly longer to finish at 14 months; however, upon completion, the software
boasted features that were revolutionary to the product. Significant improvements included
improved system requirements, like storage space and processing power, and it also featured
faster clean and scan times. When the product was announced to the market, the company had
already spent approximately $15.4 million in research and development.

1 http://www.netmarketshare.com/operating-system-market-share.aspx?
qprid=10&qpcustomd=0&qpsp=2013&qpnp=1&qptimeframe=Y
2 http://www.pcworld.com/article/162866/worst_operating_system.html?page=3

Course of Action- Delay or Release: The disadvantage of releasing the product is that some
consumers may hold off buying the anti-virus software until it is guaranteed to be compatible
with the new Windows operating system. Anti-virus software is a complementary product to
computers; thus, if you do not have a computer there is no need to buy anti-virus. For this
reason, it is important to evaluate the consumer behavior involved in buying
computers/operating systems. Consumers normally purchase operating systems together with a
brand new PC. Upgrading to a new operating system on an old computer is usually done by
people who are tech-savvy; otherwise, consumers normally stick to the operating system their
computer came with. Operating systems and PCs are high involvement think products (refer to
Annex B); as such, along with Microsofts tainted reputation from its Windows Vista letdown, the
markets shift to the new operating system will not be quick and guaranteed.
Unlike operating systems, anti-virus software has a low price making it a low
involvement think product. Once a consumer decides they need this product, not much time will
be spent researching because it involves a low margin of error if a decision was incorrectly
made3. Anti-virus is normally purchased as a necessity; thus, existing PC users will still find the
need to install one on their PC even with the announcement of the new operating system to be
launched by Microsoft. Although PC Anti-Virus sales will not be as high as anticipated, there is
still a market for the product.
Delaying the launch of PC Anti-virus 2.0 would require AV Corporate to start at the very
beginning of the phases of developing a product. The company will again need to spend several
months in research & development, and incur more costs. Included in the expenses are
opportunity costs that would have been earned if the company already made the product
available for sale to the market. The $15.4 million that the company already invested in PC AntiVirus 2.0 is already a sunk cost.
In conclusion, AV Corporate should start capitalizing on this investment in order to bring
in more profit for the company. Furthermore, the profit earned from the release of PC Anti-virus
2.0 would support the costs of research and development of making the software compatible
with the newer operating system to be released by Microsoft.
4. RECOMMENDATION
Though it carries the risk that it might not be compatible with Microsofts Windows 7, the group
still recommends for AV Corporate to release the new version of their anti-virus as scheduled. To
alleviate the concern of the subscribers and to ensure that the company doesnt lose their
current users it is also recommended to do the following:
1. Guarantee the users that AV Corporate will offer free software upgrades in the event that
version 2.0 of the anti-virus is incompatible with Windows 7 in a timely manner. AV Corporate
must make sure that they are able to deliver the upgrade promptly to avoid any inconvenience it
may cause their users.
2. Cultivate a better relationship with Microsoft to establish a better collaboration effort in the
future. Though both J.M. and Connie had contacts in Microsoft, they were still caught unaware
when Microsoft made the announcement regarding their new OS. Ideally, due to AV Corporates
dependency on Microsoft, AV Corporate should do its best to be kept on the loop or at least
have an idea of what the Microsoft is working on to avoid being caught off guard.
3. Strive to be more agile. Due to the ever-changing nature of the IT industry, it is imperative
that the AV Corporate is able to quickly respond to the demands of the market. To do this the
company may need to make use of contingent workforce during transition periods to new
platforms. A database with employee contact information and areas of expertise should be kept

3 https://moz.com/blog/future-of-content-upcoming-trends-in-2014

by the company so that management knows who is best qualified to address all major and
immediate needs of the company.
4.
Include additional features such as anti-spyware and anti-adware in the new anti-virus
software. This will give users a heightened sense of security and will make them feel like they
got a good deal out of not immediately switching away from PC Anti-Virus 2.0.