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Internet Sparks Small
Business Networking Sales
The nation's 2.2 million small businesses, already investing
heavily, are likely to increase spending on networking
hardware by more than 50 percent, according to a recent
report by Cahners In-Stat Group. Comprised of businesses
with five to 100 employees, this segment will up that
total to nearly $13 billion.
Vendors that associate their networking products with
Internet connectivity are playing it smart, says Kneko
Burney, manager of market segmentation for Cahners In-Stat
Group. "To bundle your product with the Internet such
as providing equipment to share DSL lines is a winning
strategy," Burney says. Small businesses know what the
Internet can do for them: e-mail access, Web research
and e-business functions. So, vendors can base networking
sales strategies on the Internet without having to educate
customers about the value of the Internet.
Several forces are driving network hardware demand in
the small business market:
- Increased computing per firm. Small businesses are
becoming more comfortable with computers and are relying
on them more and more to perform everyday tasks.
- Increased technology savvy. Small business decision-makers
understand networking better today than before.
- And, of course, the Internet. Networks allow better
sharing of Internet access and data lines.
The small business networking market is really two markets:
businesses with more than 20 employees and those with
less than 20. Over the next few years, larger small businesses
are expected to invest in sophisticated equipment such
as remote access servers, LAN switches and routers. By
contrast, few firms with fewer than 20 employees will
require much switching and routing capability.
Source:
Cahners In-Stat Group
In the small business market, firms with 50-100 employees
are most likely to buy routers. Of those, companies in
manufacturing, wholesaling and high tech/Internet businesses
are most likely to buy higher-end networking infrastructure.
One reason these small businesses will spend more is the
recent introduction of low-end routing products that are
appropriate for their needs.
Small business LAN penetration will show healthy growth
over the next few years. By 2000, more than three-quarters
of small businesses will use a LAN, up from two-thirds
penetration in 1998. As these firms implement more advanced
computing infrastructure and applications, their needs
for reliable, efficient and cost-effective networks will
increase, leading them to quickly migrate from peer-to-peer
networks to distributed computing.
As more workers want to dial into the corporate intranet
while on the road or in a home office, remote access will
impact small business network topology. Remote access
is an area that smaller firms will have to deploy in order
to keep up with larger companies, Cahners In-Stat Group
believes.
For internetworking vendors seeking to sell to the small
business market, Cahners In-Stat Group offers advice on
how to capitalize on this fast growing market. Strategies
range from adopting a partnership approach to use of offline
retailers. Vendors who carefully study the market and
adopt a posture of helping their customers succeed are
in a strong position to do well themselves.
Report
Information
This report takes a detailed
look at the use of networking products by the nation's
small business market. It discusses trends in Internetworking
within this group, forecasts spending for modems/RAS,
hubs, LAN switches, routers and "other" network hardware,
and forecasts LAN penetration. Key internetworking drivers
in this market are also identified.
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