SMB to grow in 2010, but not recover fully: IDC

FRAMINGHAM, Mass.: While the impact of the global recession was no surprise, the extent to which small and medium-sized businesses (SMB) were adversely affected was greater than anticipated.

As a result, International Data Corporation (IDC) forecasts worldwide SMB spending on information technology (IT) to increase by 5.5 per cent over the 2010-2014 forecast period. This is considerably lower than previous forecast.

"The downturn had a devastating impact on SMBs worldwide," said Ray Boggs, vice president, Small/Medium Business and Home Office Research at IDC.

According to him small businesses would 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 the following:

* 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 per cent throughout the

   forecast period. SMB spending growth in developed regions will be roughly 3-4 per cent.

* North America, Western Europe, and Japan collectively represent about 70 per cent of worldwide IT

   spending by SMBs.

"The diversity of the SMB market will continue to be one of its hallmarks," added Boggs.

He further said that 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."