SMB Tech Roll-up: SMB Cloud Market Under-Exploited, Facebook Beats Google for SMBs

By David Roe (@druadh20) Feb 24, 2011

In the SMB space this week, a look at research that confirms what many have suspected: The cloud space in the SMB sector has yet to be fully exploited. We also find out that Facebook is the principal online market tool for small businesses, while Openbravo offers SMBs the agile ERP.

Cloud Market Under-Exploited

While we know that the cloud market in the SMB space is substantial, we’re always trying to work out exactly how substantial that is. Parallels (news, site) has come up with a figure in a study that was published at its Summit 2011 conference, which has just finished.

According to the report, entitled Parallels SMB Cloud Insights, the total value of the market is about US$ 21 billion, with much of it still under-exploited. This figure is broken up into:

Hosted Services for U.S. SMBs with 1-1000 employees is a US$9 billion market with US$ 4.9 billion of this spending in hosted infrastructure.
The U.S. SMB opportunity is at an additional US$ 13 billion.
The Hosted PBX opportunity could be worth up to US$ 3.9 billion, as hosted PBX becomes more accessible to the smallest SMB segments.

Parallels, a back-end vendor to other Web-based service providers, defined "cloud" as any IT function hosted offsite, with a focus on three segments: Hosted infrastructure, web hosting and hosted messaging and collaboration services such as email and PBX. The survey included 500 U.S. firms with between 1 and 1,000 employees.

While small businesses or those with fewer than 100 employees make up the largest part of this market with 80%, the mid-size range is also substantial, with high penetration rates in this space already.

Social Marketing is an SMB Hit

More new research, this time from SMB network the MerchantCircle, shows that local businesses — which have limited time and money for marketing — are gravitating toward simple, low-cost online marketing methods such as Facebook and other social media, as well as toward tried-and-true methods such as search and email marketing.

The research also demonstrates that, while new marketing services such as mobile marketing and group buying are generating significant buzz in the media, local businesses have yet to tap into these unproven marketing methods.

The figures are contained in the quarterly Merchant Confidence Index survey of over 8,500 small business owners across the U.S.

Interestingly, social media are now the top marketing strategy for local businesses, with Facebook continuing to be a popular way for merchants to market their business. In fact, 70% are using it for marketing, up from 50% one year ago. Facebook has now surpassed Google (66%) as the most widely used marketing method among local merchants, and is almost tied with Google search (40%) as one of their top three most effective marketing methods.

Twitter has also grown in popularity over the past year, with nearly 40% of small businesses using the microblogging platform to build awareness and community around their products and services, up from 32% in Q4 2009.

The Merchant Confidence Index is a quarterly survey conducted by MerchantCircle, the largest social network of local business owners in the U.S. with over 1.6 million members. You can check out the full survey here.