NEW ORLEANS—Current IT industry intelligence points squarely to the greatest growth curve in sales and services over the next decade as being in the small and midsize business categories.
Oh, the usual-suspect Fortune 1000 big guys will continue to buy heaps of new hardware, software and services as they always do. But with literally millions of single-proprietor businesses hatching each year and thousands of new midsize businesses of 50 to 1,000 employees coming to the fore, cloud-based services will become the norm, replacing many desktop-, closet- and office corner-located IT systems.
IT product and service providers that can serve this burgeoning market will be well-positioned for success going forward. This is a consensus opinion espoused by several speakers Feb. 24 at the Parallels Summit 2014 here in the city that gave the world the Mardi Gras festival.
About 1,200 attendees—most of whom are application developers and cloud-service and Internet service providers—are at this international conference, which centers around Renton, Wash.-based Parallels and its progressive-thinking cross-platform software for desktops and the back ends of cloud systems.
Parallels Already a Major Player
Parallels made its reputation developing and marketing software that enables Windows OS and its apps to run seamlessly on Apple laptops and tablets. The company now does about two-thirds of its business on the service-provider side; it's a major international player in hosting and cloud services enablement and other cross-platform packages.
Parallels started up in 2000 and now employs more than 900 people in North America, Europe, Australia and Asia. The company partners with such household names as Microsoft, Hewlett-Packard, Cisco Systems, Box, IBM Softlayer, Dell Software, AT&T and many others.
"SMBs are becoming more sophisticated in their use of IT and also demanding best-of-breed solutions," CEO Birger Steen told attendees in the Day 1 keynote. "Our job at Parallels is to enable service providers to make the cloud work for businesses."
Not all the SMBs that are looking to augment their strategies with cloud services are successful at doing it. Simon Lee-Smith, director of digital SMB at Telefónica Digital in the United Kingdom, told the audience at a morning panel discussion that he sees perhaps "50,000 new companies springing up a year, and within two years, half [or more] of them are out of business.
"Service providers like us take risks along with our customers," Lee-Smith said. "It's all part of the business, and you know it going in."
Research Yields Key Data Points
The company also conducts Parallels SMB Cloud Insights research on its sector and is well-regarded for that work. Findings were shared with attendees of Parallels Summit Feb. 24. Here are some key takeaways:
--Globally, the 2013 cloud services market has grown to $62 billion. The global market will continue to see a 26 percent compound annual growth rate (CAGR) through 2016, to $125 billion.
--In the United States, the SMB cloud market is now $24 billion and is forecast to grow at a 17 percent CAGR through 2017. This growth is driven by unified communications and other online business applications, which are projected to see 32 percent and 16 percent CAGRs, respectively, through 2017.
--Cloud services that have the most current and future appeal for SMBs go across four key categories: infrastructure-as-a-service (IaaS), Web presence and applications, hosted communication and collaboration, and business applications (also known as software as a service).
--Communication and collaboration software and services, which includes business-class email and hosted PBX services, is significantly outpacing the overall market, showing a 37 percent CAGR from $4.8 billion in 2012 to $6.5 billion in 2013, and is expected to reach $20 billion by 2016.
--Infrastructure as a service is the second fastest-growing market, expected to top $42 billion by the end of 2016 with a 27 percent CAGR.
--In mature markets, SMBs now use an average of five cloud services; this is expected to grow to nine services by 2016.
--In Brazil, Parallels predicts the SMB market will show a 31 percent CAGR through 2017, reaching $4.0 billion USD in 2017.
--In Mexico, the SMB cloud services market will see a 36 percent CAGR from just over $650 million USD in 2014 to more than $1.5 billion USD, continuing to make it one of the world's fastest-growing SMB markets.
Parallels' SMB Cloud Insights research series now includes unique reports for 14 countries, including the United Kingdom, France, Spain, Germany, the Netherlands, Poland, China, India, Japan, Australia and Russia. Regional roll-ups are also available for Europe and the Asia-Pacific.