Indian SMBs to spend $500-m on servers, networking

KOLKATA: Small and medium businesses (SMBs) in India will invest close to US $500 million on servers and networking hardware this year, with two-thirds of the spending going toward network-related hardware purchases alone, a study said.

SMBs (companies with 1-999 employees) see investments in servers and connectivity as critical in the tough Indian market; and only 14% of PC-owning SMBs currently deploy a local area network (LAN). This points to a significant untapped connectivity opportunity among SMBs.

These findings are from a recent survey of Indian SMBs conducted by New York-based Access Markets International (AMI) Partners Inc.

“Small businesses (1-99 employees) account for a relatively smaller portion of total networking expenditure,” says Dev Chakravarty, Kolkata-based Analyst at AMI-Partners. “However, SB contribution to the overall SMB spend is set to rise in the future as Indian SBs try to catch up with their larger counterparts.”

Server usage is much lower among SBs, compared with MBs (100-999 employees), where servers are widely deployed. Of the total SMB server spending in India, approximately two-thirds come from MBs.

In a recent AMI survey, more than one out of 10 businesses indicated that they plan to buy new servers in the next 12 months. Among server vendors, the market leader within MBs in terms of server usage is Hewlett Packard, followed by Lenovo Inc. In server usage among SBs, India-based HCL leads the market among branded servers, while assembled servers/white boxes lead the pack in the overall SB server space in India. As for networking, routers and hubs/LAN switches will make up a large majority of the Indian SMB annual spending on networking hardware in 2006.

Wireless LAN and other networking hardware – like network interface cards, cabling, etc – follow closely behind. SMB Wireless LAN spending is expected to more than double in the next 12 months - though the current figure in absolute terms is relatively less. Wireless LAN access is also growing due to the easy availability of wireless LAN connectivity at many public hotspots. “The networking market in India will see sunny days ahead as Indian SMBs realize the benefits of connectivity,” Chakravarty says. “More and more businesses are embracing the benefits of high-speed Internet connectivity. Cellular phone penetration is also nearing saturation. Thus, networking capability is almost a ‘must-have’ for every tech-savvy enterprise in the country for sustaining their increasing communication needs.”

D-Link Systems is the market leader in the routers and hubs/switches categories among SMBs in India. It is followed by HP. However, the results are reversed for wireless LAN with HP leading the market, followed by D-Link. Cisco Systems also enjoys a significant presence in all these three market categories.

Cisco has launched innovative marketing plans for targeting SMBs, such as the ‘Network On Wheels’ (NOW), a mobile showcase of Cisco’s networking solutions range that will be displayed across key cities in India.

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