Cloud Computing Market Overview for SMB’s

Cloud computing has given small and medium businesses (SMBs) access to computing power, applications, and services that were formerly available only to large enterprises. Looking at the IT landscape at the end of 2010, we see SMBs participating in the Cloud opportunity to varying degrees—ranging from leasing a single server, to sophisticated customer relationship management systems, to complex financial packages.

The information is based on US information, which I believe are still leading the world in this space and provide great insights into future opportunities into other markets around the world.

Both the analyst community and the U.S. Census, the definition of an SMB is a company with under 1,000 employees. To further distinguish between a small business (SB), defined as a company with fewer than 100 employees, and a medium business (MB), defined as a company with 100 to 999 employees.

The Cloud services market at the end of 2010 for U.S. SMB—including Hosted Infrastructure, Web Hosting, and Hosted Messaging and Collaboration (i.e., Business-Class Email and Hosted PBX) at $8.6B. SBs are the foundation of this market, accounting for over 80% of the total market spending and over 95% of all U.S. SMBs. We believe that, as new SBs enter the market and existing SBs continue to convert from in-house IT solutions to Cloud services, the market will grow by an additional $12B ($7B in Hosted Infrastructure, $700M in Web Hosting, $400M in Business Class Email and $3.9B in Hosted PBX.

Cloud service providers are seeing push from the Giants – Microsoft and Google on their turf, and are getting concerned. The good news is that there is some seriously “low-hanging fruit”, as SMBs increasingly will be buying services, not servers. But in order to capitalise on this opportunity, you need to know which segment of the SMB food chain you are targeting, offer unique and targeted sales and marketing materials, and become a full service provider—both adding value to widely adopted services, such as basic email, and branching out into new, adjacent markets, such as Hosted PBX.

I have never been more excited about the opportunities which are presenting right now in this Market globally and locally here in Australia.

Keep an eye out for my next updates which will cover -

Hosted Infrasture – (Infrastucture as a Service – IaaS)

This category includes dedicated servers, virtual private servers (VPS), managed hosting, and utility or elastic computing.

Web Hosting

This category includes Web hosting itself, plus blogging services, domain registration, SSL and e-commerce add-ons, and site-building tools.

Hosted Messaging and Collaboration

This category consists of business-class email services and hosted PBX services, including email security, email archiving, mobility, and phone services via voice-over-IP (VoIP).

Data Information sourced from Parallels

What are your thoughts on Microsoft and Google entering the SMB Market?

This entry was posted on Monday, March 28th, 2011 at 2:17 PM and is filed under Strategy, Technology. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

5 Responses to “Cloud Computing Market Overview for SMB’s”

  1. Says:

  2. Says:

    RT @anthonybanek: Cloud Computing Market Overview for SMB's

  3. nick torpy Says:

    RT @OzHostingcom: RT @anthonybanek: Cloud Computing Market Overview for SMB's

  4. Martin Says:

    Do you see this as the slow death of shared hosting from these figures? I’d be interested in your perspective.

  5. Anthony Banek Says:

    Not necessarily. Still today as few as 50% of the smallest Small Business (1-4 Employees) have a website. Converting this opportunity represents a huge market opportunity globally.

    Its about supporting additional products and services to the SMB market not only Shared Hosting. SMB’s have good adoption rates for some of the most common online marketing tools, such as search engine optimisation (32%), social media advertising (31%), and email marketing (28%). For example, Small Business average $861/year on search engine optimization, versus Medium Business who spend $8,997/year. Service providers will be able to retain and expand their Web hosting customer base with holistic solutions that address not only SMBs’ Website needs, but also their social networking needs and online marketing efforts. This is particularly true as prospects that used to rely on hosting directories and review sites are now leveraging social media outlets to make purchasing decisions.

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