In my January 5 post on predictions I listed the line between consumer and business as one of the interesting things to watch in 2010. In the last few weeks, HP has been made a few announcements that seem to be focussed on this very issue. First they entered into a partnership with Microsoft to promote cloud computing to SMB and yesterday they announced a new sales and marketing effort called SMB Exchange to go after what they have estimated to be a $55 billion market in the US. As the market in between the consumer and business, SMB has always been tough to tackle. True it is not as fragmented as the consumer market where there are just as many decision makers as there are PC sales, but the dollars add up almost as slowly.
Of the approximately 150 million people employed in the US, half of them work for the roughly 120,000 companies with 500 or more employees. So if you want to sell computers to the 75 million users on the big business side -- you only have to target 120,000 companies. If you want to sell to the other 75 million users -- you have to pursue over 6 million targets. This is why companies like HP rely so heavily on channel partners to reach the SMB market, and presumably why HP has launched this effort. Working down from the 500 employee line, there is probably $55 billion in IT spending in the 700,000 businesses that employ between 20 and 499 people. Even this is a daunting number without partners.
So to those that are thinking that HP intends to cut their partners out of the market, take comfort in knowing that no matter what HP does in Rio Rancho, they are not going to be able to cover this entire market. In addition, there are 5 million businesses in the under 20 employee market up for grabs. Many economists have been thinking that this is where the hiring is going to happen when the recovery finally turns into more jobs. It will be interesting to see how our industry works to take advantage of that trend.