Small and medium-sized enterprises (SMEs) represent the bulk of the business market for telecommunications and IT services in Hong Kong, according to a new report prepared by the Yankee Group, a Boston-based research and consulting firm.

Service providers view SMEs as a huge, if not well understood, market that is difficult to reach.

"More than 58 percent of our surveyed SMEs reported using broadband services for an Internet connection," said Geoff Letts, Convergent Communications Asia-Pacific director. "SMEs are spending over 20 percent of their total IT budget on the Internet, but mobile and fixed voice services still consume 50 percent of their budget."

The Report, "SME Asia-Pacific 2002: A Perspective on Hong Kong," charts the findings for Hong Kong across five key application areas for SMEs: fixed voice services; mobile voice and data services; Internet usage and access; Web sites; and corporate networks.

"Our survey indicates that SMEs spent an average of US$25,000 on IT and communications in 2001, but 84 percent of the sample plan to hold or decrease expenditure next year," Letts said.

At the end of 2001, Yankee Group interviewed 151 Hong Kong companies with between 2 and 499 employees. The report examines user churn for fixed voice services, analyzes penetration of company-issued mobile phones and profiles Internet consumption and Web site usage of SMEs. It also provides recommendations to network operators and service providers.