Microsoft Fights for the Small and Middle Market

Widespread adoption of information technology by enterprises has fueled IT vendor growth for the last decade. But slowing economies, greater reliance on outsourcing, and market saturation have slowed enterprise spending. In an effort to keep their business growing, enterprise vendors are eyeing small and mid-size businesses (SMBs), a market segment in which they are increasingly likely to collide with Microsoft products and services. The trend is forcing Microsoft to maintain or even reduce prices, ramp up partner programs to ensure that enterprise vendors don’t poach Microsoft partners, and reorganize its sales team to focus on this newly competitive market.

The Market Opportunity

How big is the SMB market opportunity? Depending on how one defines SMBs and how one defines technology spending, the numbers range from merely large to colossal. For enterprise vendors like IBM, which defines a “mid-size” business as having less than US$1 billion in sales, the market for technology among SMBs is more than US$300 billion annually. Microsoft’s more granular definition of the SMB market (shown in the chart “How Microsoft Defines the SMB Market“) is limited to companies with less than US$50 million in annual sales, and puts the financial opportunity at about US$30 billion a year.