Mergers from Norton, Windows Defender advancing, Windows 11 implementing a host of security features.... what is the future of consumer third party AVs?
For consumers, ...the AV industry has been suffering for years due to a host of reasons (from my bird's eye view). Windows Defender advancing and coming pre-installed as default is a big one. Usage patterns changing to mobile and tablets (safer forms of computing with tight app ecosystems. Pushing people to Appstore's that are heavily vetted). 2FA and Password managers (and requirements) ...securing accounts more safely.
Back in the early days of XP and Windows 7, there was good money to be made cleaning infected consumer PCs. I'd say the main reasons why would be:
Most AVs are made with the focus of infection prevention not for cleaning systems (the idea is that infection prevention is better than repairing the damage aftwards). I would definitely not put malware cleaners and antivirus software under one umbrella in the discussion because those have a different goal and focus.
The change to mobile and tablet does not mean it is now more secure. We just have more systems that AV needs to support and at least for Android there is plenty of threats and there are AVs that support it. Apple products have never been the primary market for AV software anyways, no matter if that is iOS or MacOS.
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But to get back to your original question. Yes, Windows Defender being the default on systems undoubtedly had an impact on the third party AVs. The market is far from dying though.
Firstly because the B2B market indirectly supports the B2C market. If you have your product already working in the business why not also sell a version of the same technology to consumers.
Secondly mass-targeting malware still exists plentiful and I do not see it going down any time soon. These do not care what systems they infect. They are spammed to all kinds of email addresses no matter what. Or use rogue software downloads in conjunction with search engine poisoning or any other method that works in mass targeting. Worms and viruses also do not care if they infect a business computer or something else.
Thirdly malware authors do not evade all of the existing antivirus products, they concentrate on the most wide-spread, because they weigh effort vs results. That means a default installed product like Windows Defender has a big disadvantage in that regard whereas products with less coverage have an advantage. A diverse landscape of security products and competing antivirus products are better for security on a global scale.
And the last point is: There will always be people with specific needs that the de facto product cannot fulfill but can be catered to by third party products. That can range from different functionality, to settings/tweaking possibility, the ability to be used, e.g., by blind people, the impact on the system, and also privacy concerns (different countries have different laws regarding privacy protection, some people make their decision dependent on where the AV company has their servers and customer data).