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
that outsourced tech spending by SMBs is being driven by a lack of in-house

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 that SMBs are also committing an ever-increasing
number of dollars to paid search because “they’re starting to find that it

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.

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