More than 40 percent -- or 2.8 million -- of small and medium businesses (SMBs) in the U.S. are already using Web 2.0 applications despite the lack of a distinctive definition for the new platform, according to a market study by AMI-Partners. From blogs to Skype to Amazon, SMBs are adopting Web 2.0 to cut costs, improve profits and reach customers. "SMBs in mature economies like the U.S. have already started to jump on the Web 2.0 bandwagon although actual awareness is still low," says Jackie Chan, director of Global SMB Primary Research at AMI-Partners in New York.

While debates abound on the actual definition of Web 2.0, AMI-Partners views Web 2.0 as the second generation of Internet-based services, distinguished by the transition of static websites to a platform for applications development, creating opportunities for developers and ISVs to monetize new applications in new ways. This results in new opportunities for the users of these applications to consume them and express themselves in ways not possible before.

The AMI studies on U.S. SMBs conclude that the following factors will drive growing SMB usage of Web 2.0 applications:

• Gain affordable access to otherwise expensive technology solutions. Approximately 14% of U.S. SMBs are already using software-as-a-service (SaaS) and this is expected to grow 24% by the end of 2007.
• Desire to cost-effectively market, sell and support their customers. Over 400,000 U.S. SMBs currently use webcasts or blogs for advertising and promotion while 260,000 SMBs are leveraging podcasts.
• Open additional channels of communications while decreasing cost. Another 400,000 U.S. SMBs are currently using Skype while mobile instant messaging (IM) is deployed by over a million U.S.-based SMBs.
• Participate in online communities and portals. One-in-five SMBs are currently participating in some form of electronic marketplace that specifically caters to buyers and sellers within their industry.

AMI believes that the ingredients for successfully courting SMBs with Web 2.0 applications will include service offerings that encourage collaboration and allow for customization, while addressing user security concerns. Some emerging areas of robust growth will include online storage and backup solutions, hosted CRM and SFA solutions, web-based productivity tools, and other online collaboration solutions. The Web 2.0 wave is not only changing user consumption behavior, but also the channel landscape for independent software vendors (ISVs) and their business models. Large vendors such as Microsoft, Google and IBM should also consider the impact of their Web 2.0 developments on ISVs and how to leverage these channel partners in the SMB space.

About the market research study

AMI Partners International reports, "2006-2007 United States Small and Medium Sized Business (SMB) Market Overview and Comprehensive Market Opportunity Assessments" and "2006-2007 Small and Medium Sized Business (SMB) Global IT and Telecom Forecasting Model", highlight major trends in the context of current/planned IT, Internet and communications usage and spending. Products and services covered include established and emerging hardware, software, applications and business process solutions. Based on AMI’s annual surveys of SBs and MBs across Australia, the studies track a broad spectrum of issues pertaining to budgets, purchase behaviors, decision influencers, channel preferences, outsourcing, service and support. Also covered are detailed firmographics and critically important technology attitudes and strategic planning priorities. This data points to key opportunities and messaging hot buttons for vendors and service providers seeking to match their offerings to SMB market requirements.

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