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Small and Medium Resellers Close the Gap on Corporates in Security Software Market

CONTEXT Global MD Adam Simon
CONTEXT Global MD Adam Simon

Just four percentage points separate the security software market share of small and medium resellers (SMRs) and corporate resellers, reflecting changing business priorities during the pandemic, according to CONTEXT, the IT market intelligence company.

CONTEXT’s latest figures for Q2 2021 sales through distribution in Europe revealed SMRs with a share of 48% and corporate resellers on just 52%. This is compared to the third and fourth quarters of 2020 with a fourteen percentage point differential when SMRs had 43% and their larger counterparts posted a healthier 57% share. Virtually all (95%+) sales of security software go through either SMR or corporate resellers.

We know that projects are being put on hold in larger companies during the pandemic, whilst smaller firms may not have been investing as they should and are now playing catch-up”, said CONTEXT Global MD Adam Simon. “This could partly explain why we’re seeing this shift in channel dynamics. It’s therefore not surprising but represents a significant change nevertheless.

The shift is reflected in all major security software types, but particularly in control management and network security, where corporate resellers’ market share dropped from 56% in Q2 2020 to 47% in Q2 2021.

Less pronounced drops in market share for corporate resellers came in authentication (66% to 60% year-on-year), internet security (70% to 69%), and security suites (52% to 50%).

Year-on-year revenues in Q2 fell significantly for corporate resellers in internet security (-10%) and authentication (-30%) while it rose for SMRs by 56% in control management and 48% in network security.

The changing reseller dynamics come as security software led the way as the top performing category over the past four weeks. In Week 26 it peaked at over 160 in CONTEXT’s Weekly Revenue Trend Index, meaning revenue was 60% higher than the average for 2019. The category was 155 as of Week 28, versus the next-placed monitors and data management software at around 125.

Overall, software and licenses has seen continued strong growth in Q2 and has made an impressive start to the third quarter, although, as there is traditionally a surge at quarter-end, performance is expected to decline over the coming weeks.

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