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Mobility,
Collaborative Apps Drive Mid-Sized Firms' Hardware Spending
Medium-sized businesses, with an increasing need to
support more mobile workers, remote offices, and collaborative
applications, will increase their computer hardware spending
from $13 billion in 1998 to over $17 billion in 2002,
according to a new report by Cahners In-Stat Group. Spending
roughly $166,000 on computer hardware annually, In-Stat
expects mid-sized firms to emerge as a key growth segment
for systems hardware vendors over the next five years.
The key buyers in the mid-sized segment are firms with
fewer than 250 employees, which account for 70 percent
of the mid-sized market. Although they spend less than
larger firms do, the under-250 employee segment creates
the substantial volume that hardware vendors look for
when introducing a new product.
The key drivers identified for hardware sales in the
next few years are:
- Mobility: As more workers are based in the
field, mid-sized firms will need to replace desktops
with laptops.
- Collaboration: As mid-sized firms continue
to adopt collaborative applications, more employees
will require access to corporate collaborative platforms.
This will force companies to add client hardware for
new employees and to replace outdated hardware to
improve workflow.
- Y2K: Many mid-sized businesses are far behind
on upgrading for compliance. These firms are likely
to do a great deal of hardware replacement in the
weeks leading up to the turn of the century.
- Increased centralized information: With collaborative
and Web applications high priorities for mid-sized
businesses, these firms will need to make more investments
in server and storage hardware to support more centralized
databases.
- Industry drivers: Supply chain integration
in manufacturing industries and remote work groups
in service industries are leading mid-sized firms
to make increased investments in new types of client
hardware and to bolster server capabilities.
On the client side, mid-sized businesses (100 to 999
employees) are replacing desktops due to the Y2K bug and
buying laptops to support mobile workers. The declining
prices of PCs including laptops, and the increased prevalence
of employees working at home, are expected to drive client
hardware growth over the next five years. Client hardware
accounted for more than a third of total hardware spending,
or $5 billion, in 1998.
With more employees connecting to corporate resources
via the Internet and using powerful collaborative applications
like Microsoft Exchange, Cahners In Stat Group expects
mid-sized firms to make substantial investments in server
hardware in the next few years. Many firms will invest
in large, centrally based servers to provide access to
Exchange, Lotus Domino and the Internet. "A big server
managed in a central office with WAN connections is much
less costly than putting a bunch of smaller boxes in multiple
locations," says Kneko Burney, director of market segmentation
for Cahners In-Stat Group. Total spending on server hardware
was about $3 billion in 1998.
After the turn of the century, Cahners In-Stat Group
expects a gradual upturn in storage hardware investments.
That upturn will be the result of mid-sized firms investing
wholeheartedly in collaborative platforms and web strategies
that require increased storage capabilities.
Report
Information
Cahners
In-Stat Group expects mid-sized companies to replace many
desktop PCs with laptops, a reflection of the more mobile
nature of workers. In-Stat also expects middle market
firms to start making major investments in collaborative
and Internet-enabling applications. Facilitating collaboration
across dispersed groups and using the Web to better reach
and serve customers, as well as cutting costs are two
top priorities for mid-sized firms. Mid-sized businesses
are investing heavily in computer hardware, particularly
client hardware and server hardware. The emerging application
service provider industry may affect these firms' demand
for server hardware. However, effects won't be visible
until late in 2000.
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