Report: Increasingly Mobile SMBs Are a Wi-Fi Market Opportunity

With the number of Wi-Fi enabled devices, including the enormous range of smartphones, increasingly finding their way into small to medium-size businesses, it is hardly surprising to expect vendors and wireless Internet service providers to cater to midmarket companies. However, a report from ABI Research, which specializes in emerging trends in global connectivity, discovered the market opportunity SMBs offer is striking.

Additionally, a report released by New York-based SMB research firm Access Markets International (AMI)-Partners discovered SMBs are becoming increasingly mobile companies: Not only has the number of mobile firms increased from 2006, but the intensity of their travel has increased significantly. ABI says SMBs, which in some parts of the world make up 99 percent of all businesses, have not yet adopted 802.11 network solutions to a great degree, and provide "a golden opportunity" for Wi-Fi vendors of both equipment and services. "Despite the present economic downturn, this is a hot market," said ABI vice president Stan Schatt. "But SMBs have very particular needs and characteristics, and vendors wishing to serve this market need to pay close attention to them."

The report says sometime later this year, the estimated number of mobile small-medium businesses in the world (those with between five and 99 employees who use smartphones when traveling) will pass 200 million. Despite Schatt's positive assessment of the Wi-Fi market opportunity, the report notes SMBs, unlike enterprises, purchase equipment based on operating cash flow, not capital funds. As the economic crisis saps SMB profits, Wi-Fi vendors must think creatively to capitalize in the face of dwindling opportunities.

Since small businesses often do not have the staff or budget capacity to hire a full time IT technician, vendors need to find an appropriate channel to pitch their solutions. "Many small business owners are not tech-savvy and will favor a sales environment that provides customer education and support," Schatt said. This environment of support also extends to security offerings, as SMBs are less likely to be locked down as tightly as they should be.

Making Tracks

The AMI report should give Wi-Fi vendors another reason to go after midmarket companies: SMBs are traveling more, and upgrading their technology to compliment their mobile movements. The survey found nearly half of small businesses (SBs - up to 99 employees) and nearly nine in 10 medium businesses (MBs - up to 999 employees) now report having workers who travel at least four or five days per month for business.

Not only has the number of mobile firms increased from 2006, but also the intensity of their travel has increased significantly. Domestic travel has nearly doubled, while international travel has increased five-fold among mobile SBs. "What we've found over the past couple of years is that the intensity of how they travel has spiked," said AMI analyst Chad Henry. "They are going farther out and going into opportunities farther away from their local market."

The report found that while SMBs may put off upgrades and expand their PC utilization beyond the typical three-to-four-year time period, many are increasingly replacing older desktop PCs with portable units, which AMI said it believes will help keep portable spending growth in positive territory. Henry says the reason SMBs cite is that portable, Web-connected devices such as notebooks and smartphones are going to make the company more productive. "The more Wi-Fi proliferates around the places they're going, they can be more productive because they can use Wi-Fi in a train station or on a plane.

Several airlines have recently announced the availability of in-flight Wi-Fi connectivity, including United Airlines, which in January announced plans to offer Wi-Fi broadband accessibility on select transcontinental flights starting in the second half of the year. The service will first benefit travelers flying from New York City to Los Angeles or San Francisco. Aircell, United's in-flight communication provider, has also inked deals with Delta, American Airlines and Virgin America.
 
While it may be easier than ever to surf the Web in the sky, the worldwide economic crisis has forced many SMBs to curtail travel spending, Henry said. "We see travel budgets being cut and conferencing solutions being adopted," he said. "That being said, it doesn't take away from the need to be face-to-face with clients. Trading a desktop for a laptop still makes sense; having a mobility solution like a smartphone still makes sense."

Indeed, AMI also found SMBs are transitioning from cell phones to smartphones to leverage data applications. While AMI said it expects outlays on cell phones to shrink with shrinking payrolls, spending on smartphones will continue to grow as mobile data access will enable agility and quicker response times - critical factors in today's environment.  

AMI estimates the market opportunity for SMB mobility-related solutions in the United States to be approximately $1.2 billion - including smartphone service & data plans, network firewall/VPN, smartphone/PDA equipment, and wireless LAN.  The estimates exclude portable PCs and cellular phone equipment and service. The U.S. SMB mobility market, for these products and services, is expected to grow from $1.8 billion to $2.6 billion over the next five years.

Despite curtailed spending, Henry sees mobile SMBs continuing to spend on products and services deemed critical even in current economic times, such as notebooks and netbooks, conferencing services, and smartphones-solutions that are typically very heavily used by sales and business development staff.

"Our research shows while layoffs are on the rise, SMBs will hold on to their rainmakers and will continue to provide them with tools that help them deliver business," Henry said.