Despite global trade challenges and a potential global economic slowdown, the channel has continued to perform well through the first half of 2019. According to NPD’s Distributor and Reseller Tracking Service, the U.S. B2B technology channel grew 4 percent in the first half of 2019 continuing to outpace U.S. GDP growth.
Software led the market with an 8 percent year-over-year growth, now representing 26 percent of industry sales, up 1 percentage point compared to year ago. Within the software market, security grew at twice the rate of non-security software up 15 percent versus 7 percent. Security software now represents 22 percent of the software category, also up one percentage point compared to year ago. Leading the security category was the security information & event management (SIEM) segment, which grew 30 percent, followed by identify and access management (IAM) (+20 percent), gateway and firewalls (+15 percent), and data loss prevention & endpoint protection (+4 percent).
Strong growth in the SIEM market continues to be propelled by IT security staff shortages where SIEM solutions are helping augment overtaxed staff (e.g., false positive discernment), regulatory compliance in industries such as financial services and healthcare, and more AI-based approaches to correlating both internal and external events on the network. Strong growth in the IAM market is being driven by the small-to-medium business market gravitating towards multi-cloud environments that require multiple logins (e.g., Customer resource management, Enterprise resource planning, etc.) coupled with organizations looking for solutions to better marshal privileged access as more firms are adopting big data strategies for their digital transformation strategies.
Key growth areas of the non-security software segment were cloud infrastructure & platform-as-a-service (+37 percent), content & collaboration (+16 percent), and business intelligence & database systems (+14 percent). Robust growth in the cloud &platform-as-a-service segment is being driven by partners transitioning into managed service providers, small businesses gaining access to enterprise-grade applications with minimal investment, and firms reducing their hardware footprint in favor of leased infrastructure via Microsoft Azure and Amazon Web Services. Growth in the content and collaboration segment is being be driven by the adoption of general office productivity applications, such as Microsoft Office 365, coupled with more specialized applications (e.g., Adobe Creative Cloud and AutoCAD) that typically resonate in departments such as marketing, engineering, or graphical design areas. Strong growth exhibited in the business intelligence & database segment is being buoyed by firms increasing their hiring of more data scientists or actuaries to take advantage of data being generated via internet-of-things strategies. This helps to drive operational efficiencies, refine customer segmentation, and enhance company innovation.
I expect we will continue to see growth in Q3 that will be heavily tied to the government buying season; however, I remain cautious about the impact of a potential slowdown, which could stall U.S. GDP growth in the future.