Technology tends to develop with attendant dangers,
and Trend Micro is tackling the computer viruses
that annoy individual computer users and threaten
whole networks in the global economy.
In 1987, two Pakistani brothers wrote a program to prevent people from pirating their software. If someone attempted to make an unauthorized copy of the software, the program would "punish" the pirate by destroying all the data on the hard drive of the pirate's computer. The program was named "C-Brain."
The C-Brain program, however, proved to be a curse for legitimate computer users, for the ingenuity of the program inspired hackers to find new ways to write programs that could destroy computer systems. Many hackers used C-Brain as the model and began to develop new mutations and variations for more nefarious uses.
A news article about the C-Brain mutations that were infecting computer users caught the attention of Steve Chang, who runs, with his wife Jenny Chen, Trend Micro, a company that sold a software protection lock to prevent piracy. His curiosity piqued. Chang managed to secure a copy of the virus and subjected it to intense analysis.
Trend Micro has since established a reputation battling computer viruses, which present one of the greatest dangers to an economy ever more reliant on integrated computer networks. Today, the company's antivirus products and security solutions are widely used in Asia, Europe, and the United States. So far, it has secured the largest global market shares (about 60 percent) of antivirus servers, Internet gateways, and e-mail servers.
Traded on the Tokyo Stock Exchange and NASDAQ, the company's 2003 revenues amounted to US$454 million, and the market value of its outstanding shares reached US$2.2 billion. The company has also averaged an annual increase of 75 percent in revenues since its inception in 1988. Today, Trend Micro has a workforce of about 1,800 employees, as well as 26 branches, four R&D centers, and four laboratories worldwide.
At home, Trend Micro won the "2003 Taiwan Top 10 Global Brands" award, beating more than 1,000 renowned enterprises in a survey. Its brand value was estimated at US$763 million, making it the most valuable Taiwanese brand. Commissioned by the Bureau of Foreign Trade of the Ministry of Economic Affairs, the survey was conducted by the international brand consultancy, Interbrand, on the bases of revenues, market status, marketing promotion, and market development potential.
Trend Micro's rise to prominence in the creation of antivirus technology resulted from some very determined corporate planning. "Our operational strategies can be summed up by an acronym: FAMES, which stands for focus, alliance, channel momentum, execution, and systematic innovation," Chang says. "These principles have since helped us weather the many storms along the way."
Those storms often arise in the technology field with little warning and astonishing speed, demanding of the company strong direction and a whole lot of foresight. In starting his business, Chang was looking for a new product that would have strong development possibilities and market potential. He set his eye on computer viruses, which have been a persistent problem, but were initially seen as normal bumps in the road.
He remembers that when he introduced his company's first version of PC-cillin for personal computers (PCs) at the 1990 Autumn Comdex Show in Las Vegas, other companies did not consider antivirus software a viable product. To them, a virus was just a small programming tick and antivirus software a necessary solution but with a short lifespan as a product.
Yet with the growing reliance on computers and the ever-increasing interconnection between computer networks, viruses have become such a threat that computer security is considered a national security question. Chang, in other words, was onto the right thing at the right time.
When the extremely popular Microsoft Windows 95 was released, Trend Micro had already released LanProtect antivirus software to help protect Internet connections and PC-cillin 95 that helped to debug computers as they were increasingly coming into contact with other computers (and therefore viruses) through the rapidly expanding Internet.
The company's creations enabled it to secure a niche. However, it was not until the massive outbreaks of computer viruses, such as Michelangelo in 1992 and Melissa in 1999, that businesses began to scramble for long-term antivirus protection.
In response, Chang's company began to find ways to expand. Chang decided to find business partners to make up for his company's weaknesses, such as the lack of funds for marketing and technical support services, particularly during the early period of his business operations.
In 1992, Trend Micro signed a strategic alliance contract with Intel, in which Intel was in charge of marketing and after-sales services for Trend Micro's server-based software LanProtect (later renamed Intel Landesk Virus Protect). Trend Micro, on the other hand, was responsible for product development and virus code updating. Trend Micro also maintained distribution rights in Asia, and more importantly, its products' copyright.
According to Chang, the alliance was a turning point in his company's development. It was also Intel's first investment in an Asian software company. Intel's high name recognition and extensive sales channels led to booming sales in the US and Europe, and the licensing fees paid by Intel enabled Trend Micro to enjoy a steady revenue flow, while developing new products and laying down roots in the Asian market.
In addition, under Intel's strict requirements and supervision, engineers at Trend Micro learned to consistently improve user interface and product reliability. They did this partly by adopting rigorous testing before production and distribution.
Although profitable for both companies, the alliance represented only a step on the road toward marketing Trend Micro's products independently. "Producing our products for another company in the long term was not our goal," Chang says. "Developing our own brand name had long been our dream. Since we still held LanProtect's marketing rights in Asia, we thought we should seize this opportunity to promote Trend Micro's name and image. Otherwise, we would have been drowned by Intel's strong brand name and would have never had a chance to be known separately."
Chang and his wife decided to relocate to Japan and establish corporate headquarters there, given that it is the world's second-largest single-language market. With the implementation of effective marketing strategies, the company's PC-cillin (renamed Virus Buster) became Japan's top antivirus desktop solution, capturing over 70 percent share of the local market.
In 1998, the company was listed on the Japanese over-the-counter stock market. Before the company went public, the market value was estimated at US$100 million by its investment partner Softbank. After the company went public, its market value jumped to US$770 million.
Chang points out that although his company ended the agreement with Intel in 1997 in an effort to establish its own brand name, his company continued to seek strategic alliances with leading global companies, including Compaq, Lucent, Hewlett Packard, IBM, Microsoft, NEC, Toshiba, and Fujitsu by forging partnerships and marketing certain products together.
Trend Micro has been centering on the penetration of the corporate market and targeting leading enterprises. Presently, corporate products and solutions make up nearly 80 percent of the company's total revenues.
The endorsement of reputable companies and links to famous brands, Chang says, have helped consolidate his company's name and its product distribution worldwide. But Chang believes the key to the company's success is its emphasis on innovation. "We're always in search of breakthroughs in technology and trying to make our software support all the leading operating systems," he says. "And we've learned through experience that only by continuous innovation in either technology or product development can we survive in the market."
That innovative spirit led Trend Micro to introduce the first antivirus software, called InterScan, for the Internet and the first software to protect e-mail servers, ScanMail, helping corporations kill viruses before they enter a network. The company also began to provide free virus-scanning services online, such as HouseCall, and the outsourcing antivirus service eDoctor that changed the concept of network security and drew attention to the company.
In launching global operations, Chang says it is important to make the best use of the advantages that a country can provide so as to maximize efficiency. Taiwan's advantages, he says, are the quality talent pool and good infrastructure that has fostered a healthy manufacturing base for electronics and information technology industries.
The United States, he says, has the most advanced information technologies and a mature user environment, while Germany has a high demand for accuracy that is suitable for conducting data tests. The Philippines also offers the company certain advantages. Because of the country's abundant supply of good engineers with good English capability and cheaper personnel costs, Trend Micro set up an around-the-clock development and support center (TrendLabs) there to monitor potential security threats worldwide and develop the means to identify, detect, and eliminate new viruses.
According to Chang's wife and business partner, Jenny Chen, the couple had their eye on starting an international business from the outset. Today, she is in charge of Trend Micro's global branding, marketing, corporate communications, and public relations. "The software industry has no national borders, given that cultural and language barriers have all disappeared under the formation of the new language of the electronic age," she says. "Since viruses are transnational, our operations need to be transnational as well, so that we can offer services to our customers worldwide."
Chen says that for software companies today, global marketing is no longer merely a way of showing off overseas, but a requirement for survival. In the age of the Internet, if one does not dominate the market, one has no future, she says. In her opinion, the major challenge for management is how to formulate effective marketing strategies that can be applied to its business units in different countries, but still command flexibility in fitting into individual cultures.
"Transnational management is one of our major challenges, as it calls for continued communication among different parties, but at the same time brings a great sense of achievement," she says. "It's impossible to achieve universal brotherhood through politics, but it can be realized through the operations of transnational companies."
Moreover, Chen thinks that the company's international operations give her a chance to make new friends and explore different cultures. It has been a precious experience for her and her husband, she says, and helped them keep an open mind for the many changes required to be successful and stay on top of the industry.
Steve Chang likes to say if one adds the letter "e" to his family name, one will come up with the word "change." "You can call me Mr. Change, and then embrace changes with passion," he always tells his staff, smiling.