Small Businesses Fuel Big Numbers in Cloud Services

There are big opportunities in those small businesses.

The small and midsize business (SMB) cloud market accounted for an impressive $18.9 billion in the United States and is forecast to grow 19 percent through 2015, according to hosting and cloud services enablement specialist Parallels’ SMB Cloud Insights report.

The report claimed growth is fueled by software-as-a-service (SaaS) applications, which saw 60 percent growth in 2012. Sixty-eight percent of SMBs indicated they would prefer to buy their cloud services as part of a discounted bundle.

The 2012 cloud services market has grown to $45 billion. At least 6 million SMBs entered the cloud market for the first time last year, and the global market will continue to grow at 28 percent through 2015 to a forecast of $95 billion, according the Parallels’ report.

The report found cloud storage is a strong upsell opportunity for infrastructure-as-a-service (IaaS) providers, and 50 percent of SMBs are willing to pay more for increased storage. The research also indicated Website building tools are a key way to differentiate service providers’ offerings. Currently, 22 percent of U.S. SMBs are building and managing their Websites with such tools. Just under one-third reported they plan to adopt Website building tools by 2015.

Parallels calculated the SMB market at the end of 2011 to be $15.1 billion across all categories of cloud services. Hosted infrastructure contributes $5.9 billion to this market, Web presence services contributes $2.7 billion, hosted communication and collaboration (including premium business email and hosted PBX) adds $2.2 billion, and business applications, also known as SaaS, account for the remaining $4.3 billion.

In the past year, 7 percent more SMBs entered the server market, including purchasers of both in-house and hosted servers. Of these new market entrants, 60 percent went straight to the cloud, and the remaining 40 percent purchased in-house servers. The report noted the new server adoption trend is especially marked among micro SMBs, where overall server penetration grew by 13 percent—these SMBs were three times more likely to go to the cloud than to buy in-house infrastructure, the report noted.

“The U.S. cloud market for SMBs is growing rapidly. Increasing numbers of SMBs are rushing to leverage the value of the cloud, which gives them enterprise-level computing power, applications, and services at prices they can afford,” the report said. “In 2011 alone, a million U.S. SMBs have started using cloud services. We expect this growth to continue as more and more SMBs realize the benefits the cloud can bring to their businesses.”

Patrick Burke is a writer and editor based in the greater New York area and occasionally blogs for Rackspace Hosting.