Techaisle Analyst Insights

In India, SMBs’ awareness of cloud computing trails only slightly behind mature markets. Predictably, awareness is significantly higher among mid-market businesses than small businesses. However, awareness of the term increases significantly among companies with 20 or more employees suggesting interest in cloud computing jumps once businesses grow beyond a certain size. In addition, mid-market businesses with 250-999 employees have the highest awareness about cloud computing as these firms have are still building their in-house IT infrastructure and are evaluating all options to meet their IT needs. SMBs also agree largely on what the term means – about half of all SMBs surveyed agreed that the term included all of the following aspects.

• Subscribe to IT services that are hosted by third-party

• Subscribe to Servers hosted by a third-party

• Subscribe to applications hosted by third-party

• Access applications using a web based interface

• Subscribe to storage and security hosted and provided by third parties

Over the last few years, as the market has evolved and more vendors have entered the fray, a number of new terms have become commonplace each meant to either truly represent a component of the market or a marketing gimmick by some vendors to try and create and legitimize a niche for themselves. The rising sophistication of SMBs is evident in that they are at least familiar with the various terms being bandied about. This is not to say that SMBs do not differ in their views of what each term actually means.

Familiarity with the term cloud computing is rising among SMBs suggesting vendors’ evangelism activities are having some effect in terms of recognition and awareness. However, a good understanding of the benefits of cloud computing varies significantly among the SMBs. More importantly, awareness among channels that serve the SMB segment is limited with pockets of misinformation. Even if the SMBs and channels know about the benefits of cloud computing they still worry about security and data privacy.

Cloud computing has been touted as the next big thing but as far as the Indian market is concerned while there is a lot of hype and interest generated around this technology the ground realities reflect a more sobering truth: that SMBs in India are still some way off from shifting to the cloud in a big way and that the initial vendor push is more oriented to the upper mid-market businesses and large enterprises.

In India, Infrastructure, also known as IaaS, has the potential to change the way IT hardware is purchased, designed and used. With its promise of infinite scalability and a pay-as-you-go pricing model, the primary benefit that cloud IaaS services extends to the SMBs is efficiency at lower IT costs. It lowers the barriers to market growth by lowering technology costs and upfront investments. This is true both for small and mid-market businesses for many applications. The picture is substantially different for mid-market businesses and small businesses taken separately. Mid-market businesses display a greater willingness to adopt hosted infrastructure and platform solutions than small businesses which is understandable.  Small businesses prefer business appliacations and industry vertical solutions. Cloud platform vendors should therefore actively seek partnerships with such vertical ISVs in order to drive utilization of their own services and data center resources.

Gitika Bajaj
Techaisle

“Clouds come floating into my life, no longer to carry rain or usher storm,
but to add color to my sunset sky.”
- Rabindranath Tagore

The Global SMB Cloud Computing market will reach $23.5B this year and double to $47B by 2016, according to our latest forecast which is being updated using several thousands of survey responses and results of and segmentation and predictive analytics studies conducted in the first three quarters of 2012.

Rapid market growth in the Cloud Computing arena, especially for SMBs, is not a surprise to those watching the market, but our latest forecast shows that several segments will offer more than $1B in opportunity, as shown in the attached chart. Among those that will cross the $1B threshold are Other SaaS, ERP/SCM and Storage, the latter growing at ~30% CAGR. Keep in mind that the five types of arrows show relative growth relationships; the actual rates are very healthy and range from 10% to over 30%.

Other important points in the forecast include:

Approximately 60% of the volume growth is expected to come from North American SMBs, or $14B of the incremental volume of the global $23B, while Western Europe is expected to add $3.7B growing at a rate of 11%, and Asia/Pacific (excluding Japan) continues to develop rapidly – in the 20% range - on the back of China’s expansion and Korea’s continued economic strength in IT and global production, and is expected to add almost as much total volume as Western Europe, or about $3.4B vs. the $3.7B mentioned above.

Eastern Europe is expected to develop into a ~$1B market over the forecast period as is Latin America, both growing rapidly from a relatively small base. And as has historically been the case, Africa and the Middle East continue to lag with a very small share of both volume and growth.

“A picture is worth a thousand words.”
- Napoleon Bonapart

With all the movement around VDI, as analysts we tend to think in abstract terms about what is means to the market at large and our clients. With my daughter home from college this week I got a firsthand look at what the next generation is doing with technology and how real it actually is.

The scenario went like this:

With a week before finals in Organic Chemistry and a major paper due after Thanksgiving break, my daughter needed some freeware called ChemSketch, but it does not run native on her MacBook. Nonplussed, she downloaded an Oracle VirtualBox client, Windows XP, and the ChemSketch, created a new system disk and shared folder and was working on her chemistry paper, drawing molecules and all the other things that I don’t pretend to understand.  While I was proud to see how quickly she overcame the problem, what really struck me was that thirty years ago I was in front of a blinking CRT using a timeshare network learning FORTRAN with a prompt – the C: prompt that my daughter used triggered the memory and caused a major episode of deja vu. It is really amazing to see how both the context and content change over time.

We at Techaisle want to wish all of our friends a Happy Thanksgiving and  beginning of the Holiday Season!

29 percent of SMBs say that PC OEMs should offer Android OS PCs; 5 percent intent to purchase

Techaisle’s recent survey of SMBs in North America (UK, Australia data coming in March; China, India in April) suggests that the PC may be returning to its roots as a window to broader resources, less important as a content creation machine than as a portal to cloud-based systems. In the survey on SMB end-point device adoption trends, respondents were asked to use a scale to indicate the kinds of PCs that they would like to see from their PC suppliers: a “1” response indicated that they required only Windows-based PCs, a “10” indicated that they required only Android-based PCs, and responses towards the middle of the scale indicated a preference for choice between the two platforms.



The data shown in the graphic indicates that Windows is clearly still the #1 choice for PC buyers – but it also shows that many small and mid-market businesses are interested in having an Android alternative. 29 percent of SMB respondents said that PC vendors should offer Android OS based PCs.  In fact, in a follow-up question, 5 percent of small businesses and 18 percent of mid-market businesses stated that they would “most definitely” be interested in acquiring Android-based PCs. Almost twice as many BDMs (Business Decision Makers) as ITDMs (IT Decision Makers) are in the “most definitely” group.

What’s behind this? It’s very likely that Android-based PCs may not have the same level of capability as Windows-based PCs – but we can assume that buyers at SMBs understand this, particularly the traveling business decision makers. It appears that they are indicating that the needs associated with ‘personal productivity’ in a cloud-based world are changing, that in many cases, the PC is primarily a window into resources located elsewhere, and secondarily, a content-creation device.

The PC in 2014: more like the windshield than the engine

The PC has been a ‘content creation’ device in world dominated by consumption-oriented smartphones and tablets. Is its position eroding?

In the very early days (the 1980s), PCs in business led a dual existence. Especially in technology-poor small businesses, PCs provided access to tools like spreadsheets that allowed for automation of previously-manual, hard-to-manage tasks, while in larger enterprises, they were often used as terminal emulators – essentially, windows to larger systems offering the added bonus of local processing power.

Through time, the PC became the key personal productivity tool for staff in all industries, working for organizations of all sizes. In recent years, though, the PC’s pre-eminence has been assailed by the growing use of smartphones and tablets that offer limited local processing power, but access to the vast resources of the Internet. In many environments – and in the usage patterns of many ‘multi-screen’ workers who can choose between a PC, a smartphone and a tablet for a specific task – the PC has become niched as a ‘content creation’ device, useful for building presentations or spreadsheets or complex documents, but awkward for on-demand display of these kinds of content.

Good news for the monkeys. Whither the gorilla?

An increasing market for Android-based PCs would be hugely advantageous for companies that produce tools for Android users, and especially, for providers of open-source Office suites such as FreeOffice, OpenOffice and Kingsoft. However, it is Techaisle’s belief that the availability of a fully-functional version of Microsoft Office on Android will be essential for broad Android PC success, as many businesses require these applications for local PC activities.

How should Microsoft react to these market trends? On the one hand, delivering a complete version of Office for the Android platform would open up an enormous market opportunity, giving Microsoft the potential to continue positioning Office as the lynch-pin connecting PCs and content creation. On the other hand, Android’s gains in the PC market will come directly at the expense of Windows 8, diminishing Microsoft’s control of the platform, and accelerating Windows sales declines in an already-soft PC market.

There are likely widely-divergent views on this issue in Redmond. It is worth noting, though, that even a firm as omnipresent as Microsoft takes on risk if it attempts to thwart buyer demand for new technology. The “third hand” in the dichotomy above – that Microsoft continues not to offer full Office functionality for Android, that FreeOffice, OpenOffice, Kingsoft or something similar become embraced as ‘good enough,’ and that large swaths of the market decide they can live without Windows and Office – is clearly a nightmare scenario. We expect that as user demand mounts, Microsoft will feel increasingly-compelled to participate aggressively within the Android PC market segment, even as it touts the advantages of Windows within its native PC constituency, and as an alternative to Android (and iOS) in the smartphone and tablet environments.

More detailed data on end-point device preferences is available in Techaisle’s upcoming report titled “SMB End-Point Device Adoption Trends: Tablets, PCs, Smartphone” which covers:

• Current and Planned purchase Intentions of client devices

• Tablet OS & Application adoption – Behind the Screen

• BYOD: Employers vs. Employees

• Across the OS generations: XP, Windows 8 refresh intentions

• New OS PCs: Chromebook, Android

• Converged Mobility PCs: 2-in-1 PCs

• Purchase Channel and Sources of Information

More details about the report can be found here

Related Research Articles

Techaisle survey data shows BYOD is a major force in the US SMB Market

Seven Key Trends and their Meaning: SMB Endpoint Device Market in 2014

Key Attributes of Successful SMB Mobility Solutions

Techaisle’s recently completed US SMB Cloud Computing Adoption Trend research shows that Cloud computing – which IT suppliers often position as a means of reducing cost – is viewed by 80 percent of US SMBs as a solution that contributes to business growth. This is a huge departure from previous years when reducing cost used to be the overarching objective. It implies that cloud vendors and resellers should expand their marketing dialogue beyond the cost and CAPEX vs. OPEX motivations for cloud adoption and focus on ways in which cloud-based solutions enable SMBs to expand their reach to new markets and customers. In fact, over 40 percent of SMBs state that business agility and new capabilities are driving SMB cloud adoption.

This new trend of SMBs adopting cloud for business growth creates a “perfect storm” of opportunity for cloud computing. It satisfies the demand for new technology-enabled business capabilities such as mobility, social media, business intelligence/analytics and collaboration by providing a platform for supporting these initiatives. At the same time, as IT continues to struggle with cost control, cloud provides a clear means of reigning in CAPEX and reducing management costs.

Techaisle’s survey data shows that while there is broad recognition of the importance of business agility as a cloud benefit, a “mid-SMB” niche exists – stretching from 50-250 employees – in which IT productivity is the overarching cloud objective.

The key reasons for using cloud and benefits realized vary by size of business as well as issues that are of critical concern to SMB organizations. For example, small businesses (1-99 employees) focus tightly on business benefits: increased business agility is the most compelling cloud benefit, followed by obtaining capabilities that would have been cost/time prohibitive, reducing business process-related costs, and improving business staff productivity. Mid-market businesses (100-999 employees) also appreciate these outcomes – but the highest-ranked benefit of cloud is IT related, with “make our IT staff more productive” cited as a compelling cloud benefit by nearly 60 percent of mid-market businesses.

Drilling down into the different sizes of businesses the 1-9 micro-business group also places a high value on using cloud to reduce process costs, which makes a great deal of sense, since these tasks are likely not automated in any fashion today. Respondents in the 250-499 employee size segments prioritize use of cloud to increase business user productivity, while the 500-999 employee segments is focused on cloud delivery benefits such as capabilities/agility and IT productivity. Analyzing the data by BDMs and ITDMs, the study finds that these groups have different perspectives on how cloud delivers value to their companies.

Marketers can use this data to establish broad themes for the US SMB market, and then tailor their appeals to specific sub-segments based on demonstrated needs and expectations. For more details or to learn about Techaisle’s SMB Cloud Computing Adoption Trends report please contact This email address is being protected from spambots. You need JavaScript enabled to view it.