Tablets Fuel Small Business IT Spending Boom

By Pedro Hernandez | Posted April 05, 2012

IDC is expecting 2012 to be record-breaking year in small business IT spending, and tablets will help lead the charge. This year, SMBs in the U.S. will spend $138 billion on IT.

According to the research group, small businesses will outspend midsize companies and enterprises on PCs and peripherals. In particular, IDC expects tablets and netbooks to add some spark to the PC hardware market. It's a safe prediction; the explosion of mobile devices and app ecosystems owe more than a little to the brisk rate of tablet adoption by SMBs.

Technology spending by American small businesses will have a noticeable affect on the global IT market. All told, the country's 8 million SMBs will generate a quarter of global SMB IT spending activity in 2012. In terms of overall spending, attributable to both SMBs and enterprises, this year American SMBs will be responsible for 10 percent of all IT spending worldwide.

And small business tech spending can only go up from there, according to IDC's Justin Jaffe, research manager for the Small/Medium-Sized Business and Home Business Research unit. "SMBs will account for an increasing share of overall corporate IT spending in the U.S.," he said.


That spells good news for IT vendors, that is provided they know how to cater to the technology needs of small business. "Vendors that are sensitive to the changing dynamics in SMB technology requirements as well as the critical differences in the ways SMBs and large enterprises approach IT investment will be best positioned for success in 2012 and beyond," he advises.

The Bigger They Are, the Harder They Fall (for IT Services)

On the IT services front, small businesses are expected to part with $38 billion in 2012. IDC also shares an observation about the market dynamics that affect how businesses budget for technology. As a company's size increases, so does the likelihood that services will take up more of its IT budget.

Whereas IT services "account for nearly half of all IT spending" for large enterprises, IT services will only attract 25 percent of total SMB IT spending this year. IDC also reports that the "midsize business market for IT services will be more than triple the size of that for small firms throughout the forecast period."

The news isn't as good for server and storage sales. While still an area of growth, it will be a slow climb.

IDC rests the blame on virtualization, which is catching on as a hardware reduction strategy with smaller enterprises, especially midsize organizations. Similarly, SMB spending in networking technologies is expected to be "modest" says IDC. In fact, more than a third of small businesses have yet to deploy a network.

The outlook is brighter when it comes to software. In 2012, SMBs will spend nearly $50 billion -- more than a third of total U.S. small business IT spending -- on packaged software. Software is also the fastest growing IT category with a compound annual growth rate (CAGR) of six percent.

Pedro Hernandez is a contributing editor at InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals. Previously, he served as a managing editor for the Internet.com network of IT-related websites and as the Green IT curator for GigaOM Pro. Follow him on Twitter @ecoINSITE.

Do you have a comment or question about this article or other small business topics in general? Speak out in the SmallBusinessComputing.com Forums. Join the discussion today!

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