Robust Channel Sales Buoy Trend Micro&'s 2Q

Trend Micro on Wednesday reported sales of nearly $159.6 million, a 16 percent year-over-year gain, and earnings of $36.5 million, up 2.7 percent, for the quarter. Operating income fell 13 percent year over year to about $50.8 million, largely because of extra support costs incurred in Japan after a technical glitch in a security update slowed customers&' computers and servers to a crawl.

“Hidden within the results is the fact that the U.S. had the best quarter in the three years that I&'ve been here,” said Lane Bess, president of the company&'s North American operations, based in Cupertino, Calif. North American sales grew 32 percent year over year, Bess told CRN.

New antispyware products also fueled growth, and sales continued to grow for Trend Micro&'s more mature antispam and antivirus products, Bess said.

On the channel front, Bess said he was concerned that sales growth for national resellers outpaced sales growth for the company&'s premium partners. “We are closely watching the battle for our premium partners to maintain the value they add as they compete with the national resellers,” he said.

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As security technologies mature, customers tend to turn to the cost-plus resellers, Bess added. For premium partners, “the challenge is to continue to show that new threat protection is not a commodity buy,” he said.

Kathy Johnson, director of sales at Johnson Consulting, a Woburn, Mass.-based solution provider, said she&'s also concerned about the jump in sales at national resellers. “It makes me nauseous just thinking about it,” she said.

Trend Micro&'s deal registration program alleviates “some of the pain” of losing large deals to national resellers by compensating the VAR that initiated the deal, according to Johnson. “But there is nothing else in place to recognize and reward the value we add,” she said.