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Small-business PC sales to boom

Small-business PC sales growth will surge by 32 percent in 1998, outstripping growth in the consumer and corporate markets.

Small-business PC sales growth will surge by 32 percent in 1998, outstripping growth in the consumer and corporate markets, according to a new market research report.

The small-business PC market will expand by nearly one-third this year, Dataquest says, carrying the segment's growth past the home and corporate markets, traditionally cash cows for PC manufacturers. Expected to reach growth in the high teens, the latter two have recently suffered from market saturation.

Strong corporate revenue among small enterprises and an increased faith in computer technology are the primary factors driving the growth. Small businesses want to jump on the Internet and develop a competitive edge by buying more computers, according to Dataquest. These firms are also beginning to confront the year 2000 bug by repurchasing or re-upgrading their systems.

Dataquest also expects a shift as major PC manufacturers awaken to the potential of this growing market. While non-branded "white box" PC assemblers currently claim a large chunk of sales, the small business market is starting to become a priority for major PC manufacturers like Hewlett Packard, Dell, Gateway, Compaq, NEC, and AST.

But selling to small businesses has always been a risk and PC giants have traditionally turned a blind eye to the market. "[PC manufacturers] have been focusing on the low-hanging fruit," said Dataquest analyst James Staten, referring to the corporate and home PC markets.

"[The small-business market has been] a much harder sell. Many people don't understand it. It?s too expensive to go after and VARs [value added resellers] just don?t want that business. Resellers and VARs don?t like to sell to small businesses because revenues are smaller per customer," Staten added.

Nonetheless, Dataquest predicts PC shipments to small businesses employing 10 to 49 employees will grow by 35 percent, the highest of any sector Dataquest measures. The report also predicts a 38 percent sales boost in the service sector: finance, computers, health care, and data processing.

Dataquest defines a small business as a company employing under 100 employees and using between 2 and 65 PCs in its office.