In-Stat/MDR estimates that the small business market (firms with 5 to 99 employees), in aggregate, spent more than $154 B on information technology in 2002, up almost four percent from 2001 estimates. By 2006, In-Stat/MDR estimates that small businesses will spend roughly $192 B on information technology products, services and personnel. This market is the second largest purchaser of technology in the US, second only to the enterprise market. Given this, these customers are definitely key targets for IT providers of all types. However, In-Stat/MDR research suggests that telecom and LAN equipment providers will most likely experience the biggest bang for their marketing dollars in this segment, as these will be two key areas of technology spending in this market for years to come.

Increasing spending per firm in this market, combined with growth in the number of small businesses, is expected to lead to fairly strong growth in total small business IT spending over the next several years. Annual growth in IT spending is expected to continue to increase through 2005, where it is expected to peak at more than six percent.

In comparison to other business segments, the overall small business market is the second largest in terms of IT spending, behind the enterprise market, accounting for roughly 31 percent of all US business IT expenditures this year. This market's share of IT expenditures is expected to grow over the next several years as these firms continue to become more sophisticated in their use of technology.