My Take on the Small Business Virtualization Market

SMBVirtualizationMy colleague, Edward, wrote a post on Small Business Virtualization, and I wanted to write a followup on my take of the small business market. For me, when I think of small business, I am really thinking of the mom and pop business that you can find everywhere. In fact, according to the United States Census Bureau post on small business sizes, most only have a few employees and would not have a datacenter or server farms. Here is the breakdown of the numbers.

Employment Size of Employer and Nonemployer Firms, 2008 Introductory text includes scope and methodology. These data are also available by industry and state. Table includes both establishments with payroll and nonemployers. For descriptions of column headings and rows (industries), click on the appropriate underlined element in the table.
Employment size of enterpriseFirmsEstablishmentsPaid employeesAnnual payroll ($1,000)
n/a – Receipts data are available for employers only for the years for which an economic census is taken (2007, 2002, 1997).
Employer firms5,930,132 7,601,169 120,903,551 5,130,509,178
Firms with 1 to 4 employees (or with no employees as of Mar 12)3,617,7643,624,6146,086,291232,062,907
Firms with 5 to 9 employees1,044,0651,056,9476,878,051222,504,912
Firms with 10 to 19 employees633,141667,4638,497,391293,534,352
Firms with 20 to 99 employees526,307705,43020,684,691774,589,335
Firms with 100 to 499 employees90,386359,90217,547,567706,476,693
Firms with 500 employees or more18,4691,186,81361,209,5602,901,340,979
Firms with 500 to 749 employees6,06072,6763,681,760156,491,764
Firms with 750 to 999 employees3,03848,0052,617,087114,635,897
Firms with 1,000 to 1,499 employees3,04464,5563,720,654167,658,791
Firms with 1,500 to 1,999 employees1,53345,0622,653,392121,800,728
Firms with 2,000 to 2,499 employees90436,0812,011,24494,406,916
Firms with 2,500 to 4,999 employees1,934120,4166,726,611329,188,349
Firms with 5,000 employees or more1,956800,01739,798,8121,917,158,534
Firms with 5,000 to 9,999 employees975121,8356,773,466337,598,036
Firms with 10,000 employees or more981678,18233,025,3461,579,560,498

Source: Statistics of U.S. Businesses (See industry and state detail) and Nonemployer Statistics

In my opinion, it is this type of small business that cloud computing will help the most, especially in the Software-as-a-Service (SaaS) platform of cloud computing. SaaS has caught the attention of IT at small businesses as it offers everything from email and customer relationship management (CRM) to web conferencing and security applications. Using a web browser or thin client interface, it provides access to applications hosted on a provider’s cloud infrastructure. Cloud is not a single service offering—it’s simply a different way of delivering many of the brands you already know and use today, including: CA, Microsoft, Symantec, Trend Micro, and VMware, among others.

With SaaS, users connect to a business application and all its features and capabilities via a secure web connection. Because the actual application runs at a vendor’s data center, subscribers are not responsible for buying the infrastructure, installing software, maintaining the platform, and putting backup and disaster recovery systems in place. For a predetermined monthly fee, companies enter a subscription agreement for the underlying services they need. SaaS providers generally price applications on a per–user basis.

It is this technology that I believe will let the smaller businesses have some of the same tools that some of their bigger competitors use, thus leveling the technology field of these smaller companies without increasing the cost of physical equipment and people to maintain the technology.

Although I have spent most of my career working with Fortune 500 companies, I have had the opportunity to talk with some of these  small business owners, and the more they learned about the capabilities that they have in the cloud, the more excited they get about the possibilities.

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Steve Beaver (182 Posts)

Stephen Beaver is the co-author of VMware ESX Essentials in the Virtual Data Center and Scripting VMware Power Tools: Automating Virtual Infrastructure Administration as well as being contributing author of Mastering VMware vSphere 4 and How to Cheat at Configuring VMware ESX Server. Stephen is an IT Veteran with over 15 years experience in the industry. Stephen is a moderator on the VMware Communities Forum and was elected vExpert for 2009 and 2010. Stephen can also be seen regularly presenting on different topics at national and international virtualization conferences.

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