What's Up With The SMB?

Switching gears a bit form my most recent thoughts on social networking and the channel, I wanted to start a discussion on what is happening in the SMB market. A recent article on ChannelWeb discusses the very significant decline in SMB revenue for North American solution providers. You can read it here...

I found it interesting in that many of the channels reviewed in the article had different rationale for the decline (all double digits...some as high as 20+%). They referred to the exchange rate, geography, market segments, and lower margins. They talked about being "cautiously optimistic", "protracted road to recovery", "markets we serve have reached bottom", "aggressive price competition", and "all segments went down some". This is hardly good news for the channel serving the SMB.

I am curious if the precipitous decline in the SMB market is just a reflection of the economy, or if there is perhaps something else going on. Is there a new world order forming in the products and solutions serving the midmarket? What would it mean to the channel?

ChannelWeb has another article regarding the Top 10 Technologies High On The Minds of Midmarket CIOs. Granted, one article is about the SMB market and the other on the midmarket, but I do think there is some commonality. I won't go through all of the technologies, but rather point out that Virtualization, Business Intelligence, Security, Unified Communication, Collaboration, ERP, and CRM all lend themselves to cloud computing. Are these CIOs most interested in these solutions because of the economic benefits of hosted and managed solutions? Is this trend (if true) only a function of the economy? Will the trend reverse back once the economy makes a turn?

Again, what does all of this mean to the channel and the relationships they have with their customers and vendors?

My guess is that the technology trends are a direct result of the economy, but that even with a turnaround the trend towards cloud computing will continue. Channels serving the midmarket and SMB market will need to adjust their strategies accordingly. Those that have performed well on the top line (at least relatively) have also experienced a significant negative decline in margins.

Let me know what you think....