Small Businesses Are Tightening Their Belts on Technology Spending but Not Too Tightly, IDC Says

FRAMINGHAM, MA – JUNE 11, 2001 – Small businesses are spending less on technology in 2001 than they did in 2000, but not alarmingly less. According to IDC’s latest survey, small businesses plan to purchase fewer PCs but will expand their use of the Internet, high-speed services, and PC networking products. While spending growth has slowed, IDC expects to see double-digit sales gains in some areas.


"Small businesses were surprisingly upbeat when we asked them their forecast of the economic climate," said Raymond Boggs, vice president of IDC’s Small Business and Home Office Research. "They were divided between those who see rough weather ahead and those who see clear sailing. What’s important, though, is not the accuracy of the predictions, but the effect of expectations on buying behavior. To the extent that small firms believe a slowing economy will not affect their business, they will continue to represent an increasingly attractive segment for technology providers."

Small Business Forecast of the Economic Climate for the Next 6 Months

Climate % of Respondents

Nothing but blue skies 9.8%

Sunny with passing clouds 28.6%

Neither rain nor shine 16.9%

Occasional showers 27.6%

Stormy 13.8%

Don’t know/no answer 3.3%

N = 508

Source: IDC, 2001

Providers in the broadband Internet technology space will especially benefit from small businesses’ purchasing behaviors. According to IDC, the percentage of small businesses using broadband communications capabilities has increased from 11% in 1999 to nearly 15% in 2000. Plans to use broadband have also increased – over 13% of small firms plan to add broadband this year compared with 7.5% who planned to add broadband in 2000.

IDC’s small business technology outlook is as follows:

· The stellar performers – major dollar gains. This category comprises broadband Internet access, notebook PCs, and Internet-based services (at least Web hosting).

· Potential high flyers but still on the launching pad. This category comprises wireless LANs, low-priced servers, and IP telephony.

· The basics: important but still losing spending share. This category comprises desktop PCs, plain old telephone service (POTS), and fax machines.

Small business spending on Internet-related services and notebook PCs also looks strong. "Small firms will be scaling back on desktop PC purchases, but expanding their acquisition of notebook models," Boggs said.

For technology suppliers jockeying for position in the changing small business market, IDC believes preparing for intense competition in the core areas and continuing to promote their latest technologies – especially the ones small businesses are most interested in – are key factors that will ensure their long-term viability.

IDC’s bulletin Small Business Technology Outlook: Attitudes and Spending Plans in Uncertain Times (IDC #B24757) analyzes small businesses’ attitudes about the economy and how it’s affecting their technology investments. Purchase intentions regarding a variety of technologies are examined. To purchase this bulletin, contact Patrick Steeves at 1-800-343-4952, extension 6787, or at

Editors’ Note: A graphic depiction of the above table Small Business Forecast of the Economic Climate for the Next 6 Months can be obtained by contacting Sharra Owens at 508-935-4258 or at

About IDC

IDC delivers dependable, high-impact insights and advice on the future of ebusiness, the Internet, and technology to help organizations make sound business decisions. IDC forecasts worldwide markets and trends and analyzes business strategies, technologies, and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC provides global research with local content through more than 700 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at

IDC is a division of IDG, the world's leading IT media, research and exposition company.


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