October 13, 2009, 12:00 AM

Security software maker Symantec takes online sales in-house

The maker of Norton computer security products has begun transitioning to its own e-commerce system, gradually moving away the platform of vendor Digital River, which has handled online sales for Symantec and stands to lose its largest customer.

Katie Evans

Managing Editor, International Research

 

Symantec Corp., maker of Norton computer security software products, has begun transitioning to an internally developed and operated e-commerce platform, moving away from the outsourced system of Digital River Inc., which has handled online sales for Symantec and now stands to lose its largest customer.

The transition to the in-house platform will proceed gradually and will be completed by June 30, 2010, when the company’s contract with Digital River expires. The only market where online sales will not be handled internally is Japan.

Symantec sold $650 million on the web in its 2009 fiscal year, 36% of its consumer revenue, and paid Digital River $95 million in fees, the software maker says. Digital River says it was informed Friday by Symantec that it would not be renewing the outsourcing contract.

Moving to its own e-commerce system will give Symantec greater control of its business, says Janice Chaffin, president of Symantec’s consumer group. “The benefits of managing an in-house e-commerce capability include building a closer relationship with our customers, enabling greater speed and agility to take advantage of market trends, and increasing earnings per share over time,” Chaffin says.

Sales of Symantec products accounted for 24.3% of Digital River’s revenue in 2008 and Digital River derived another 9.4% of its revenue by selling other services to Symantec customers, Digital River says. “We are surprised and deeply disappointed that Symantec has chosen to move to an internally developed system, but we remain very confident in the future of our business,” says Digital River CEO Joel Ronning. “While Symantec is still our largest customer, the proportion of Symantec revenues relative to our other customers has declined significantly over the past few years as our non-Symantec business has grown at an increasing rate.”

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