2002 U.S. Small Business Segmentation - Strategic Overview

AMI-Partners proposes the most actionable and distinguishable method to segment the small business market is by IT adoption. IT adoption is defined as a business' propensity to adopt, or absorb, IT solutions as a means to grow and manage their business. High adopters of IT would be those who are embracing more advanced IT solutions (LAN, e-commerce, mobile PCs, servers, etc), while low adopters are those that are resisting, or do not have a need (whether real or perceived) for IT solutions including a PC (which many low adopters do not have). By segmenting the SB market using an IT adoption algorithm, AMI-Partners is able to accurately profile businesses across a spectrum of attributes including business characteristics, decision making, attitudes, business processes, and IT usage - leading to actionable go-to-market strategy development. For a more in-depth view of the data collection and segmentation methodology see the methodology section of this report.

This report provides a management summary of the AMI-Partners' US Small Business IT Adoption Based Segmentation. Reference will be made to four segments within the segmentation, called tiers, from the highest adopter of IT (tier 1), to the lowest adopter (tier 4). Thus, these four distinct segments have been named by AMI-Partners as AMI Tier 1 SBs, AMI Tier 2 SBs, AMI Tier 3 SBs, and AMI Tier 4 SBs - from the highest (AMI tier 1 SB) to lowest (AMI Tier 4 SB) adopters of IT.

Based on proprietary surveys of Small and Medium Businesses in the United States, Europe, Asia/Pacific and Latin America, AMI-Partners' comprehensive data on Internet, IT, eBusiness, and Communications investment and usage is presented in a highly actionable, graphical format with go-to-market insights and analysis.

Introduction

Introduction & Segmentation Model Overview

High-Level Segmentation Profiles

Utilizing This Report with the Topline Appendix

Individual Segment Summary Breakouts

AMI Tier 1 SBs – Premium IT Solutions Adopters

Market Size

IT Adoption Profile

IT Expenditure Profile

Attitudes and IT Adoption Drivers/Mindset

Demographic Profile

AMI Tier 2 SBs –Value Priced/Early Adopters

Market Size

IT Adoption Profile

IT Expenditure Profile

Attitudes and IT Adoption Drivers/Mindset

Demographic Profile

Solutions Recommendations

AMI Tier 3 SBs –Mainstream Businesses

Market Size

IT Adoption Profile

IT Expenditure Profile

Attitudes and IT Adoption Drivers/Mindset

Demographic Profile

Solutions Recommendations

AMI Tier 4 SBs –IT Laggards

Market Size

IT Adoption Profile

IT Expenditure Profile

Attitudes and IT Adoption Drivers/Mindset

Demographic Profile

Segment IT Needs/Value Proposition Summary

Segmentation Implications – Target Market Benefits and Challenges

Marketing Strategy Implications

AMI 2002 U.S. Small Business Enterprise Market Opportunity Assessment: Statement of Methodology

Interview Methodology and Survey Instrument Overview

Sampling Pool & Recruitment Criteria

Incentives, Follow-Up Calls and Return Rate

Weighting Factors

Margin of Error

Small Businesses Defined

AMI-Partners 2002 IT Adoption Based Segmentation: Statement of Methodology

Segmentation Methodology

Variables Used

Cluster Analysis

Discriminant Analysis/Reclassification Testing

List of Figures

Figure 1: U.S. SB Survey Methodology Overview

Figure 2: U.S. SB Survey Coverage

Figure 3: U.S. SB Weighting Factors By Employee Size

Figure 4: U.S. SB Margin of Error

Figure 5: U.S. Small Businesses Defined

Figure 6: U.S. SB Segmentation Variables Used

Figure 7: U.S. SB Segmentation Process Overview

Figure 8: U.S. SB Distribution of MBs by Segment

Figure 9: U.S. SB Spending Ratios

Figure 10: U.S. SB Key Ratios

Figure 11: U.S. SB IT Horizontal Spending by Category

Figure 12: U.S. SB Key Technology Penetration

Figure 13: U.S. SB Key Technology Penetration (Continued)

Figure 14: U.S. SB Average Annual Spending Per Business by Segment

Figure 15: U.S. SB Average Annual Spending Per Business by Segment

Figure 16: U.S. SB Demographic Summary

Figure 17: U.S. SB IT/Telecom Spending Comparisons

Figure 18: U.S. SB Segment Profile/Salient Characteristics – Tier 1

Figure 19: U.S. SB Segment Profile/Salient Characteristics – Tier 2

Figure 20: U.S. SB Segment Profile/Salient Characteristics – Tier 3

Figure 21: U.S. SB Segment Profile/Salient Characteristics – Tier

Figure 22: U.S. SB Demographics – Comparison Across Segments

Figure 23: U.S. SB Telecommunications – Comparison Across Segments

Figure 24: U.S. SB Computing – Comparison Across Segments – Hardware, Software & Peripherals

Figure 25: U.S. SB Computing Software and Operating Systems – Comparison Across Segments

Figure 26: U.S. SB Networking and Servers – Comparison Across Segments

Figure 27: U.S. SB Internet, Online & e-Business – Comparison Across Segments

Figure 28: U.S. SB Breakout of SBs by Industry – Comparison within Segments

Figure 29: U.S. SB Breakout of SBs by Industry – Comparison Across Segments

Figure 30: U.S. SB Hierarchy of SB IT Needs

Figure 31: U.S. SB Vertical Industry Proportions by Tier

Figure 32: U.S. SB Horizontal Tier Proportions per Industry

Figure 33: U.S. SB Segmentation Snapshot - 2002

Figure 34: U.S. SB Required Channel Core Competencies to Address All Segments

Figure 35: U.S. SB Segmentation IT & Telecom Spending Forecast (2002-2005)

Figure 36: U.S. SB Segmentation IT &Telecom Spending Forecast Breakout (2002-2005)

Figure 37: U.S. SB Segmentation IT &Telecom Spending Forecast Breakout (2002-2005) (Continued)

Figure 38: U.S. SB Segmentation IT & Telecom “Proportion of Spending” Forecast Breakout (2002-2005)