SMB App Sales To Reach $35 Billion By 2013: Report

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While the SMB software market is expected to be relatively flat this year with less than 1 percent growth, the market research firm estimates that spending will grow at a compound annual growth rate of 6 percent over the next five years.

The findings are in a report: "2009 Overview of the Business & Enterprise Application Software and Services Market." AMI-Partners defines small businesses as those with fewer than 100 employees while midsize companies have between 100 and 999 employees.

While the recession is constraining sales growth today, the report forecasts that stronger growth will resume in the latter half of 2010.

"Small and midmarket firms are becoming an increasingly attractive growth segment for enterprise application software and hosted services vendors," the report said. While sales of desktop operating systems and personal productivity applications are down because of slower PC sales, SMBs are still investing in companywide solutions that drive business efficiencies and improve customer relationships.

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The report predicts that while sales of on-premise software will grow at a single-digit pace through 2013, Software-as-a-Service application sales will increase at a double-digit pace. Adoption of SaaS applications among midsize companies is particularly strong, the report said.