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Forecast: SMBs will increase IT spending by $5 billion this year

IT Spending Continues to Bounce Back: IDC Report

By: Nathan Eddy

IDC researchers predicted U.S. SMBs would spend more than $125 billion on advanced technology in 2011.

Despite persisting economic challenges, small and midsize business IT spending growth has returned more rapidly than expected since the recession officially ended in 2009. Access to credit is still limited and firms remain reluctant to add new employees, but emerging technologies are disrupting established patterns of IT acquisition, and the nearly 8 million SMBs in the United States will spend more than $125 billion on advanced technology in 2011, according to a new report from IDC.

U.S. SMBs will spend more than $125 billion on advanced technology in 2011, an increase from approximately $120 billion in 2010, IDC researchers predict. These two years of spending growth represent a substantial rebound from 2009, when SMB IT spending declined by 4.2 percent.

SMBs are responding to today’s new economic realities in distinct ways and, in many cases, adapting differently from large enterprises: Although the small-business segment has traditionally shown higher IT spending growth, that pattern was broken in the past two years as smaller firms were more adversely affected by the economic downturn. That noted, the small, lower-midsize and upper-midsize segments will each continue to make a significant contribution to total SMB spending, though upper-midsize firms will have the highest rate of spending growth in 2011.

Notebook PCs will continue to be the form factor of choice and will represent a larger share of total PC shipments into the SMB market than desktops, the report said. In 2015, the number of SMBs with notebooks will approach 4.7 million.

IDC researchers also predicted the number of SMBs with LANs would exceed 4.5 million in 2015, as even smaller businesses look to connect their users’ PCs. The declining price of entry-level hardware will drive server acquisition in small firms as virtualization solutions motivate midsize firms to upgrade and consolidate their environments, IDC researchers noted.

“SMBs account for an increasing share of overall corporate IT spending in the U.S.,” said Justin Jaffe, senior research analyst for small/medium-sized business and home office research at IDC. “Vendors that understand how changing economic conditions and emerging technologies are affecting IT acquisition for different company size segments will have a considerable advantage in developing and marketing technology products and services for SMBs.”

In the report, “U.S. Small and Medium-Sized Business 2011-2015 Forecast: The Return to Spending Growth Drives Investment in Key Infrastructure Categories,” total spending is presented for 2011–2015, with the baseline year of 2010, and subtotals are provided for small businesses (less than 100 employees), lower-midsize companies (100–499 employees) and upper midsize companies (500–999 employees).

The study also forecasts the total number of small and midsize businesses, with detail for each of IDC’s eight SMB company size sub-segments, as well as the ownership of key technology categories, including notebook PCs, LANs and server-based LANs.