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Nov 2007
Report Five: The SMB market opportunity

Open source software is being widely adopted by large enterprises, but what about the much larger market of small and medium-sized businesses? Many vendors talk about SMBs as the ‘hot market,’ but how do open source vendors, open-source-enabled systems integrators (SIs), other resellers and consultants actually break into this difficult market, which is heavily dominated by Microsoft and other proprietary vendors? Among SMBs, the prospect of converting free downloaders and open source users into paying customers is in many cases more daunting than with enterprises. Margins are limited, and reaching customers through sales and marketing or channels is an expensive proposition. Yet open source software has some of the key characteristics – free or lower cost, easy accessibility, and freedom from vendor lock-in and license nightmares – to draw significant SMB business.

This report explores the challenges and conditions that must be met in order for open source software and its vendors to succeed in the SMB market. In addition to providing guidance for SMBs contemplating open source, it also examines the future trends and opportunities taking shape for open source in this very different market.

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About The 451 Group

The 451 Group is an independent technology industry analyst company focused on the business of enterprise IT innovation. The company’s analysts provide critical and timely insight into the market and competitive dynamics of innovation in emerging technology segments. Clients of the company – at vendor, investor, service- provider and end-user organizations – rely on 451 insight to support both strategic and tactical decision-making for competitive advantage.

The 451 Group is headquartered in New York, with offices in key locations, including San Francisco, London and Boston. For additional information on the company or to apply for trial access to its services, go to: www.the451group.com