SMB IT spending to fall short of growth forecasts

Gordon Peters
Thursday, 25 March 2010 13:06

IT Industry - Market

The global recession hit SMBs harder than expected and IDC has revised earlier growth forecasts for the sector, predicting that spending on IT by small-to-medium businesses will increase by just 5.5 percent between now and 2014, which is considerably lower than previous forecasts.

IDC says that while the impact of the global recession was no surprise, the extent to which SMBs were adversely affected was greater than anticipated.

According to Ray Boggs, IDC's SMB and home office research vice president, "the downturn had a devastating impact on SMBs worldwide and, he adds, "moving forward, small businesses will not follow the past pattern and return to pre-recessions spending levels more quickly than midsize firms. Instead, SMBs of all sizes will remain cautious with their IT spending over the next several years."

Key findings from IDC's SMB forecast include:

'¢    Worldwide SMB IT spending will grow to nearly $629.3 billion in 2014. Despite the $17.4 billion spending increase expected in 2010, SMB IT spending levels will not return to 2008 levels until 2011.

'¢    While SMB spending declines affected all categories of hardware, software, and services, the spending recovery will vary by technology type. IDC expects SMB spending on PCs and peripherals to experience the strongest growth, followed closely by packaged software outlays, while systems and storage spending will be the slowest growing.

'¢    SMB spending growth will be strongest in Central and Eastern Europe, the Middle East and Africa, although spending will not recover to pre-recession levels until 2011. The developing markets of Asia/Pacific and Latin America will also experience growth of more than 7% throughout the forecast period. SMB spending growth in developed regions will be roughly 3-4%.

'¢    North America, Western Europe, and Japan collectively represent about 70% of worldwide IT spending by SMBs.

Boggs says the "the diversity of the SMB market will continue to be one of its hallmarks,"  and he advises that "given that the developed regions account for the largest share of SMB spending, and the developing regions represent the greatest opportunity for market growth, the global market really becomes a 'tale of two regions.' To succeed, technology providers need to develop separate strategies that address the distinct needs of companies in each of these settings."