Indian SMBs to spend $605 million on network hardware in 2008

Kolkata : Small and
medium businesses in India are on track to invest up to $605 million on
networking hardware this year, up a healthy 24 percent over last year. About 40
percent of this spending will go towards purchases of hubs and LAN switches
alone, according to a recent survey of Indian SMBs by New York-based Access
Markets International (AMI) Partners Inc.

"India's market for
networking hardware continues to grow, driven by factors such as higher PC
penetration and adoption, boom in ITeS, call centers, and the booming BPO
market," said Dipendra Mitra, Analyst, AMI-Partners. "Also adding a boost are
factors like the expansion of IT, BPO/KPO companies, mushrooming data centers
and disaster recovery (DR) sites by large Indian organizations and MNCs."

Medium businesses accounted
for a majority (about 57 percent) of the total networking expenditure last year.
However, the contribution of SBs to the overall SMB spend is fast rising as
Indian SBs try to catch up with their larger counterparts.

Within the networking arena,
routers and hubs/LAN switches will make up a large majority of the Indian SMB
annual spend on networking hardware in 2008. Wireless LAN and other networking
hardware-like network interface cards, structured cabling, etc-follow
closely behind.

SMB wireless LAN spending is
expected to more than double in the next 12 months, from a relatively small base
in value terms. Some of the key drivers are easy availability of wireless LAN
connectivity at many public hotspots, and increased notebook penetration.
Penetration of wireless LAN has also risen by over four percentage points in
2007 from 2006 and this increasing trend is set to continue in 2008.

Indian SMBs are moving along
the growth path and adding more business partners, nationally and
internationally. Many SMBs are planning to open new branches (15 percent of SBs
and 20 percent of MBs), and networking will play an all important role to keep
employees connected. Consequently the need for a secure network connectivity
infrastructure has assumed greater importance among SMBs. This is also evident
by a rise in VPN spending, which is on track to go up by over 18 percent from
last year.

"Indian SMBs are gradually
realizing the benefits of connectivity and this will usher in even brighter days
for the networking market in India," Mitra said, adding that, "high speed
Internet connectivity, cellular phone and notebooks are helping the SMB workers
to stay in constant touch. Communications is key, as fast response to customers
can make or break deals. Thus, networking capability is a must-have for most
SMBs in the country for sustaining their increasing communication needs."

As for vendors, Cisco Systems
leads the market in India in both routers and hubs/switches among SMBs. It is
followed by D-Link Systems. However, the results are reversed for wireless LAN
with D-Link leading the market, followed by Cisco.