RealTime IT News

Big Deals From The Small Sector

Channel partners looking for growth areas should look no farther than the neighborhood strip mall or business district.

The small- to medium-sized business (SMB) sector represents a $154 billion market opportunity for channel partners in 2007, a 17 percent increase over 2006, according to AMI-Partners.

Moreover, the market for Web-hosting and other Web-based services aimed at SMBs will add up to $9.5 billion by 2010, up from $7.3 billion in 2005, according to a separate study by the Yankee Group.

That study also shows that online marketing and advertising spending by SMBs will multiply eight-fold, from $1.3 billion in 2005 to $9.3 billion in 2010.

Avinash Arun, author of the AMI-Partners study, told internetnews.com that outsourced tech spending by SMBs is being driven by a lack of in-house expertise.

He said that while SMBs have grown comfortable making their own purchasing decisions where hardware is concerned, they still depend largely on channel partners for "more complex applications."

Arun said that SMBs look to systems integrators and solutions providers for help in "more advanced services like storage, security, wireless communications, VoIP and IT consulting."

In a similar vein, the Yankee Group study found that the SMB market opportunity for Web-based professional services is burgeoning because "most SMBs lack the time, technical expertise and Internet marketing skills to establish and maintain a professional-looking Web presence on their own."

Sanjeev Aggarwal, author of the Yankee Group study, told internetnews.com that SMBs are also committing an ever-increasing number of dollars to paid search because "they're starting to find that it works."

Aggarwal said that the advent of "local" search services from Internet search engines like those offered by Yahoo and Google is responsible for driving even restaurants and plumbers to the Web.

SMBs, he said, are also finding it more cost-effective to pay for sponsored links and hire tele-sales people dedicated to responding to Web-generated leads, as opposed to hiring field sales people.

"What we're seeing is a reallocation of resources from traditional print ads and even outside sales to a more Web-based model," he said.

Aggarwal noted that SMBs are looking for expertise in a number of areas, including design and Web analytics.

According to the Yankee Group study, about 39 percent of U.S. SMBs sell and conduct e-commerce on their Web sites, which is a 5 percent increase from 2004.

But there is still a huge opportunity for service providers. About 30 percent of very small businesses (two to 19 employees) and about 15 percent of mid-market enterprises (500 to 999 employees) still don't have Web sites.