AMI-Partners' Study Predicts IT and Telecom Spending among SMBs Worldwide to Exceed $850 Billion During 2004
-- New Business Formation and IT Infrastructure Buildout in Emerging Markets Fuels Growth;
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-- Productivity and Security Driven IT Revival in Developed Economies;
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-- Global SMB IT and Telecom Spending on Track to Exceed $1 Trillion in 2006
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NEW YORK--(BUSINESS WIRE)--July 7, 2004--AMI-Partners- According to AMI-Partners' bi-annual worldwide SMB IT and Telecommunications opportunity sizing study titled "The SMB Global Model", IT and telecommunications spending among SMBs worldwide is expected to touch $868 Billion by the end of 2004. IT products and services are expected to drive approximately $528 billion of this figure, up 13% from the $467 billion spent during 2003. Telecommunications products and services, including VoIP services and on-premises equipment such as PBXs, will drive approximately $340 billion of spending during 2004.
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Based on AMI-Partners' comprehensive annual primary research based tracking with over 5,000 SMBs across the globe, The SMB Global Model study predicts worldwide SMB IT and Telecommunications spending will exceed $1.1 trillion during 2008, suggesting a 2003-2008 annual growth rate of 7.2%. APEJ (Asia-Pacific Excluding Japan) and EEMEA (Eastern Europe, Middle East and Africa) will grow their combined share of this figure from 27% to 32% during the same period, as North America and Western Europe's combined share adjusts from 58% to 53%.
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The study indicates key economic factors driving worldwide SMB IT acquisition growth include:
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-- Strong new business formation in Eastern Europe, Russia and China, led by privatization and the eastward expansion of the EU. Of the 9.5 million new businesses expected to be added to the global SMB universe by 2008, 75% , or about 7 million are expected to come from the Eastern European and Asia-Pacific regions.
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-- Foreign investments from Western European companies setting up and modernizing units in the east to benefit from lower labor costs.
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-- The continued strength of the Chinese and Indian economies and growing intra-regional trade in the Asia-Pacific theatre.
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-- Japan's economic revival, which is now spreading beyond large industrial exporters to the broader SMB universe.
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-- The low interest rate environment, coupled with a housing boom led consumer consumption spree in mature economies such as the US, UK and Australia.
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While these broader economic trends provide the fundamental basis for business growth, the stars are fully aligned on the technology side as well. The traditional 4-year PC-replacement cycle is in full swing from the Y2K period and, in combination with the ongoing shift to notebooks, is resulting in exceptional growth in PC shipments. The study shows SMBs bought $81.7 billion worth of PC hardware during 2003 and are expected to spend over $93 billion during 2004, an increase of 14%. Worldwide SMB PC shipments are likely to reach 71 million units in 2004, up 17% from 2003.
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Emerging Markets Drive Basic Process Automation Technology
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The study shows rapid PC adoption and PC density (PCs per firm) growth in India, China and Russia, with annual PC shipment growth in rates of over 20%. "Emerging markets are witnessing the rapid emergence of a services sector to serve growing affluence and domestic demand, and SMBs need basic IT infrastructure to deliver and be competitive", said Deepinder Sahni, Sr. VP at AMI-Partners. PC hardware spending among SMBs in China is expected to touch $4.1 billion in 2004, and grow to $8.1 billion in 2008. PC Shipments among SMBs in India will grow from 2.1 million units to 4.9 million during the same period, while shipments to Russian SMBs are expected to grow at an annual rate of 20% from 1.7 million units in 2004 to 4.2 million in 2008. Strong growth in businesses adopting networking products for the first time is fueling growth in routing, switching and wireless LAN gear, with annual spending growth rates in these categories exceeding 30%, and expected to grow to over $3 billion by 2008.
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Mature Markets Drive Productivity Boosting and Security Technology
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Meanwhile, SMBs in the US and Western Europe are seeking productivity growth and looking to manage costs without boosting hiring back to unmanageable levels. The study shows the hosted applications/on-demand (ASP) computing model is gaining credibility, with over 1 million North American and Western European SMBs now using software as a service. By 2008, over 3 million are expected to utilize ASP services. AMI's study shows ASP, enterprise applications such as CRM and ERP/SCM, security, intranets, IT consulting services, portable PCs and storage solutions will provide the underpinnings of IT growth in mature markets. Productivity growth is also likely to be boosted by investments in wireless networking gear, which is expected to increase from $600 million in 2003 to $835 million in 2004 in North America and Western Europe. "VoIP is just beginning to makes its presence felt in the SMB space. The intersection of VoIP and wireless technology is expected to bring huge productivity gains to this space worldwide", said Sahni. Mature market SMBs are also bolting on security apparatus to their already robust networking and computing infrastructure, driving annual growth in security spending in the 25% range. SMB spending on the full spectrum of security hardware and software during 2004 is expected to be $3.5 billion in North America and Western Europe, and likely to grow to over $10 billion by 2008.
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Newly Industrialized Nations Merge Into Global Supply Chains
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SMBs in countries such as Singapore, Taiwan and Korea, which serve as strong global manufacturing/exporting hubs, are merging into global supply chains, driving investments in networking infrastructure, ERP/SCM and CRM software and storage solutions. With an uptick in manufacturing in these countries, driven by an improving global outlook, the AMI study predicts total IT spending in these 3 countries combined will grow from $11 billion in 2004 to over $17 billion in 2008, an annual growth rate of over 11%.
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This AMI study, titled The Global Model, provides a detailed picture of IT adoption and spending patterns in the SMB space across 28 IT sectors and 15 countries, with roll ups to regional and worldwide views. The number of businesses and their spending on various technologies - including wireless LANs, IP PBXs, VoIP, outsourced IT services, storage, VPNs/firewalls, intrusion detection, CRM, ERP/SCM - are examined in depth across the 2003-2008 time frame. The study also provides drill down views of each of these technologies by 8 employee size and 7 vertical market segments and serves as the industry's most comprehensive worldwide SMB market planning tool.
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For more information about this study, AMI-Partners, or our Global SMB research, please call AMI-Partners at 212-944-5100, email ask_ami@ami-partners.com, or visit the AMI Web site, www.ami-partners.com.
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About Access Markets International (AMI) Partners, Inc. (AMI-Partners)
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The above findings were released today by New York-based Access Markets International (AMI) Partners, Inc., a leading consulting firm specializing in IT, Internet, Telecom and business services market intelligence, trends and strategy with a strong focus on global small and medium business enterprises. AMI conducts the IT industry's most comprehensive annual tracking surveys of small and medium business (SMB) enterprises in several countries including the U.S., Canada, France, Germany, U.K., Australia, China, India, Japan, Singapore, South Korea, Brazil and Mexico.
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AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital and actionable market intelligence - focusing on global small and medium business (SMB) enterprises. The AMI-Partners mission is to empower the firm's clients for success with the highest quality data, business planning and "go-to-market" solutions. AMI-Partners was founded in 1996 under the name of Access Media International (USA), Inc. (AMI-USA) by Andy Bose, formerly a group vice president at IDC. Since its inception, the firm has built a world-class management team spanning 10 to 25 years in IT, telecommunications, online communications, and multimedia. The team is comprised of individuals who formerly built careers at leading industry-companies such as ADP, Cablevision, Compaq, IBM, IDC, Gartner, McKinsey, and other major corporations.
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AMI-Partners has helped shape the go-to-market SMB strategies of more than 130 leading IT, Internet, Telecom and business services companies in the last seven years. The firm is well known for its IT and Internet-adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB tracking surveys; and its proprietary database of several thousand SMBs in the U.S., Canada, Europe, Asia-Pacific and Latin America. The firm invests significantly in collecting survey-based information with several thousand SMBs globally through the industry's most comprehensive SMB survey instrument, and is considered to be the leading benchmark for tracking SMB trends.
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Contacts
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AMI-Partners
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Nancy Carty, 212-944-5100 ext. 100
ncarty@ami-partners.com
