SMBs to spend $500 mn on servers, networking this year

Small and medium businesses (SMBs) in India will invest close to $500 million
on servers and networking hardware this year, with two-thirds of the spending
going towards network-related hardware purchases alone. SMBs (companies with one
to 999 employees) see investments in servers and connectivity as critical in the
tough Indian market, and only 14 percent of PC-owning SMBs currently deploy a
Local Area Network (LAN). This points to a significant untapped connectivity
opportunity among SMBs.

This comes from a recent survey of Indian SMBs conducted by New York-based
Access Markets International (AMI) Partners Inc. “Small Businesses (SBs -
one to 999 employees) account for a relatively smaller portion of total
networking expenditure,” said Dev Chakravarty, Kolkata-based Analyst at
AMI-Partners. “However, SB contribution to the overall SMB spend is set to
rise in the future as Indian SBs try to catch up with their larger counterparts,”
he added.

Server usage is much lower among SBs, compared with Medium size Business (MBs
- 100-999 employees), where servers are widely deployed. Of the total SMB
server spending in India, approximately two-thirds come from MBs. In a recent
AMI survey, more than one out of 10 businesses indicated that they plan to buy
new servers in the next 12 months. Among server vendors, the market leader
within MBs in terms of server usage is Hewlett Packard, followed by Lenovo. In
server usage among SBs, India-based HCL leads the market among branded servers,
while assembled servers/white boxes lead the pack in the overall SB server space
in India.

As for networking, routers and hubs/LAN switches will make up a large
majority of the Indian SMB annual spending on networking hardware in 2006.
Wireless LAN and other networking hardware — like network interface cards,
cabling, etc — follow closely behind. SMB wireless LAN spending is expected to
more than double in the next 12 months.

“The networking market in India will see sunny days ahead as Indian SMBs
realize the benefits of connectivity,” said Chakravarty. “More and more
businesses are embracing the benefits of high-speed Internet connectivity.
Cellular phone penetration is also nearing saturation. Thus, networking
capability is almost a 'must-have' for every tech-savvy enterprise in the
country for sustaining their increasing communication needs.”

D-Link Systems is the market leader in the routers and hubs/switches
categories, followed by HP. However, the results are reversed for wireless LAN
with HP leading the market, followed by D-Link. Cisco Systems also enjoys a
significant presence in all these three market categories.

DQC news Bureau