IT budgets among small UK companies are expected to be smaller than those of their US counterparts during the next four years.
Based on a survey of 500 US businesses which had up to 100 employees, IDC predicted a hike in IT spending, with particular growth among network products. The research outfit also estimated that companies spent $2.5 billion on IT last year, which will rise to $4.1 billion in 2001.
However, the UK was expecting less dramatic results from its small companies.
Andy Doyle, an analyst at IDC, said: 'Smaller firms are thinking more about economies of scale so they are centralising their purchasing and going to the direct seller.
But there is so much competition in the SME market that prices will fall and maintain the balance.'
He said IT suppliers have been aggressively targeting SMEs, but in doing so they had to cut prices since small companies keep their IT budgets low. 'The main PC vendors all decided at about the same time early last year to target the SME market because of a lag in the large corporate market,' he said.
Doyle added: 'Vendors are bundling in after-sales services suitable to smaller companies. But the trend among SMEs is to pare their purchases to the bone.'
Ray Boggs, an analyst at IDC US, attributed the increased popularity of networks among small firms to lower-priced servers and easier-to-use network software.
However, the National Computing Centre, which expects to publish its 1998 survey of IT users within the next two weeks, noted that 'the proportion of smaller businesses using IT was greater than ever last year'.
A representative at NCC pointed out: 'While spending on both hardware and software has definitely grown, preparations for the year 2000 have been one of the biggest reasons for the increase in demand.'
At the low end, the Federation for Small Businesses expects significant spending increases among its four million members, each of which has up to 20 employees.
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