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As the global economy takes its first steps toward recovery, the world's top technology firms are also looking for growth - and they're finding it by thinking small.

From Intel to Microsoft to Google, the top names in IT are redoubling their efforts to target small- and medium-sized businesses, a portion of the market that has been quicker to bounce back from the economic downturn. While big businesses have been reluctant in some cases to refresh their software and hardware, executives at smaller firms have been less frugal.

A report by market research firm Compass Intelligence released late last year showed small- and medium-sized businesses in the United States are expected to grow in 2010, with executives at those firms planning to spend significantly on IT during the year.

According to the Compass report, U.S. small and medium-sized businesses represent more than $300-billion in IT spending - a number the firm expects to jump between 5 and 8 per cent over the next five years, "making the SMB market one of the last, best growth opportunities for [IT]vendors in the long-term," Kneko Burney, chief strategist at Compass Intelligence, said at the time of the report's release.

For most businesses, the average life cycle of IT staples such as personal computers is about three to five years, according to Intel. But as the recession hit two years ago, many firms pushed further into the end of their products' life cycles. As the recession lifts, businesses are opting for new equipment over the estimated 50-per-cent jump in operating costs associated with IT products in the final two years of their lives, thanks to repair and maintenance issues.

But coming out of the recession, small businesses are also looking at a different list of spending priorities. Near the top of that list are services that allow firms to focus on what they do best, and leave the IT-related headaches to a specialized firm. As a result, more and more businesses are turning to managed services.

"Troubleshooting on their own is not going to do the trick for [small businesses]" says Elaine Mah, Intel Canada's business marketing manager. "Managed services really took root during the downturn in the economy."

As evident by the growing interest in managed services, if firms are opening their wallets again, they're doing so cautiously. Ms. Mah said a recent survey for Intel, conducted by IDC Canada, showed that about 45 per cent of PCs sold to small- and medium-sized businesses were sold through retail channels - essentially, that business owners were going to their local Future Shop or Best Buy, rather than building a detailed order with a specialized firm to customize PCs to the company's needs. The implication was clear: when it came to buying IT equipment, by far the top priority was cost.

For the same reason, companies such as Google and Microsoft are betting billions on cloud computing as the next big thing in small business spending - the thinking being that companies will opt for the short-term cost savings of leasing resources such as servers and software, instead of making huge investments up front to buy their own.

But small businesses aren't only paying for software and hardware - a significant portion of the revitalized IT spending is going toward marketing. According to online advertising firm WebVisible, small business spending on search advertising during the last quarter of 2009 more than doubled compared with the same quarter in 2008. The average small firm spent $2,149 during the quarter.

Ms. Mah predicts the next big wave of opportunity for big IT firms catering to small businesses will be in the mobile computing arena. Indeed, Intel has invested more resources in recent years on processors such as the Atom chip, which work particularly well on smart phones. But even as smart phone adoption soars, a new wave of more powerful devices is hitting the market - including netbooks, tablet PCs and other handheld computers.

"We saw a revolution in how businesses can operate when they have mobility in the form of a laptop," Ms. Mah said. "We expect a similar kind of change of game as more and more people move beyond the smart phones."

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