Asia Small Biz's IT Spending Spree

Overall technology expenditures will grow 10% next year, with a disproportionately large increase in purchases of IP telephony, says IDC

Small and midsize businesses (SMBs) in the Asia-Pacific region, excluding Japan, will spend more than US$52 billion on IT next year, according to research company IDC.

Spending 10 percent more than the US$47 billion IT budget in 2006, SMBs in the region are expected to continue to increase their spending--at a compound annual growth rate of 9.1 percent--to US$66 billion in 2010.

Walter Lee, IDC's Asia-Pacific vice president of consulting, partnering and SMB research, said in a statement: "Technology providers or vendors are paying increasing attention to the SMB business market because of its size and rate of growth.

"The key to reach the segment effectively is to define an efficient channel strategy by partnering vertical industry-specific solution partners that possess deep domain expertise and have access and proximity to local industry clusters," he added.

According to the IDC study, SMBs in India and the Greater China region continue to lead the market growth next year at 16.9 percent and 11.9 percent, respectively. In fact, China is expected to account for more than 38 percent of total IT spend in the Asia-Pacific region.

IDC noted that "the smallest companies have the greatest technology needs, lowest spend levels and least brand loyalty". The research house added that IT vendors that provide companies with "affordable access to resources" would have an advantage over those waiting for young SMBs to reach a critical size or spending level, before engaging them as customers.

According to analyst company AMI-Partners, SMBs in the region are expected to increase their investments in various technology segments this year including IP telephony, which will grow 40 percent to US$600 million, compared to 2005, and storage, which AMI-Partners estimated will see a 22 percent hike in IT spending to US$530 million from SMBs in Southeast Asia this year.

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