Profit from the cloud TM Parallels SMB Cloud Insights TM 2013 Europe and North Africa Region

Transcription

1 Profit from the cloud TM 2013 Parallels SMB Cloud Insights TM 2013 Europe and North Africa Region

2 Table of Contents Executive Summary...1 Definitions and Segmentation...2 Infrastructure as a Service (IaaS)...3 Web Presence and Web Applications...5 Hosted Communication and Collaboration...7 Hosted Hosted PBX...8 Business Applications...9 Conclusion... 11

3 Executive Summary Cloud services continue to reshape the IT market for small and medium businesses (SMBs) around the world, with an immense array of services and applications now available to help SMBs grow, collaborate, and compete in a global marketplace. In Europe and North Africa, you can find some of the world s most mature and well-established SMB cloud markets, as well as SMB markets that still lag significantly behind in their cloud use. Over the next several years, cloud services will become a central part of SMB cloud spending in Europe and North Africa, and SMBs will continue to increase the number of of cloud services they use to run their businesses more effectively. Now entering its third year of SMB Cloud Insights reports, Parallels research focused on five major SMB cloud markets in Europe France, Germany, the Netherlands, Spain and the United Kingdom. Using the results from this in-depth country level research and trends gathered from Parallels research around the world, Parallels modeled the Europe and North Africa region, estimating the regional market size and highlighting the most important opportunities for growth over the next few years. For the major cloud services Infrastructure as a Service (IaaS), web presence and web application, hosted communication and collaboration, and business applications Parallels estimates the 2013 SMB market for Europe and North Africa to be $16.8B USD a growth of 33% over the 2012 market size. As Figure 1 shows, IaaS contributes $5.5B USD to this market; web presence and web applications contribute $4.7B USD; hosted communication and collaboration which includes hosted and hosted PBX adds $1.5B USD, and the online business applications category makes up the remaining $5.1B USD. Figure 1. Europe and North Africa market size by cloud service type Opportunity for 2016 by Cloud Category $5.5B 33% CAGR Infrastructure as a Service (IaaS) $13.1B $4.7B 18% CAGR Web Presence & Web Applications $7.9B $1.5B $5.8B 56% CAGR Communication & Collaboration $5.1B 19% CAGR Business Applications $9.9B $37B Cloud Opportunity $16.8B Current Market Size According to our research, the Europe and North Africa SMB cloud services market will continue to grow rapidly in the coming years. By 2016, we estimate that the SMB market for the major cloud services will total $37B USD, representing a year-over-year growth rate of 30%. IaaS will make up $13.1B USD of that total, web presence and web applications will reach $7.9B USD, hosted communication and collaboration - with the fastest growth - will more than triple to $5.8B USD, and business applications will add $9.9B. 1

4 Definitions and Segmentation This research is focused on the cloud services that matter most to SMBs: Infrastructure as a Service, web presence and web applications, hosted communication and collaboration, and a general category we refer to as business applications. Please refer to other Parallels SMB Cloud Insights reports for deeper explanation of these categories. As for our definition of small and medium businesses also known as small and medium enterprises, or SMEs we follow the general academic practice of defining SMBs as companies with 1 to 250 employees. Sub-categories within the SMB segment include: Micro SMBs (companies with 1-9 employees) Small SMBs (companies with employees) Medium SMBs (companies with employees) As in last year s research, we divide opportunities in the SMB cloud market into three segments: Cloud leapers: SMBs with no in-house IT solution who choose to consume it for the first time as a cloud service (e.g., SMBs with no servers who purchase IaaS) Cloud converters: SMBs with in-house IT who convert to the corresponidng cloud service solution (e.g., SMBs with in-house servers who switch to IaaS) Cloud expanders: SMBs currently consuming a cloud service who will increase their spending on that service over time (e.g., SMBs with IaaS who choose to add infrastruture add-ons or purchase additional hosted server space) Key Market Segments Parallels has identified two major segments in the European and North African cloud services market, representing both different degrees of development within the countries and differences in the extent to which they have adopted cloud services: Mature cloud service markets. This group consists of countries that have a developed economy, with both in-house and hosted IT solutions widely used and easily accessible. Countries in this sub-group generally have more than 80% of the population using the Internet and include many of the world s most well-established SMB cloud markets. Most of Northern and Western Europe fall into this market segment. Maturing cloud services markets. Countries in this sub-group typically have Internet usage rates of anywhere from 30% to 80%. Along with lower Internet usage, SMBs in these markets also have lower cloud penetration rates than those in the mature markets. Most countries in Southern and Eastern Europe, as well as all of North Africa, fall into this maturing cloud services market segment. Of note, this segment includes many developed countries where 2

5 SMB adoption of cloud services still lags behind that of their counterparts in the mature markets, despite high income and relatively high Internet use. These countries include Italy, Spain, and Portugal, among others, and will be the among the fastest growing and most important markets for the European cloud market over the next few years. Figure 2. Distribution of the cloud services market segments in Europe and North Africa Sweden Norway Finland Mature Markets Percentage of 46% Market in 2016 UK Netherlands Germany Poland Maturing Markets Percentage of 54% Market in 2016 Spain France Italy Romania Turkey Algeria Libya Egypt Mature Markets 41% Market Growth Maturing Markets 80% Market Growth Opportunity for 2016 by Cloud Category The following sections examine each market in more detail as it relates to the four types of cloud services: Infrastructure as a Service, web presence, hosted communication and collaboration, and business applications. Infrastructure as a Service (IaaS) Over the last 12 months, the IaaS market in Europe and North Africa has grown a substantial 40% to reach $5.5B USD. This growth was driven by many SMBs newly entering the IaaS market and purchasing their first cloud server. Micro and small cloud leapers those choosing IaaS as their first server showed particularly strong growth. Over the next several years, the IaaS market will continue to grow at 30% year-over-year to reach $13.1B. The current IaaS market is slightly larger in mature than maturing markets in Europe and North Africa, but by 2016, the maturing market countries will have a larger share, reaching 60% of the overall market and growing over 50% annually. Micro SMB cloud leapers and cloud converters (those switching from in-house to hosted servers) will lead the growth. 3

6 Table 1. Europe and North Africa SMB Opportunity in IaaS Mature Cloud Services Maturing Cloud Services Current Hosted Infrastructure Penetration Rate Compound Annual Growth Rate (3 year) 2013 Percentage of Europe 2016 Percentage of Europe <30% <15% 18% 51% 60% 40% 42% 58% 2013 Market Size (USD) $3.3B $2.1B 2016 Market Size (USD) $5.4B $7.6B In addition to hosted server sales, much of the opportunity for growth in the IaaS market in the past year has come from add-ons purchased with hosted servers. In Parallels 2013 research, the top infrasturture add-ons across Europe are server backup, database add-ons, and security applications (including anti-virus / antispam) (see Figure 3). Webserver control panels are also relatively popular. Looking forward, infrastructure add-ons will continue to be an important part of market growth, particularly in mature markets where demand for IaaS is likely to saturate and slow in upcoming years. Offering add-on applications not only can motivate more SMBs to move to the cloud through the promise of enhanced security, for example but also can increase service providers revenues. The top infrastructure add-ons will remain stable over the next several years. As shown in Figure 3, the most popular add-ons will be server backup, security applications and database add-ons. Figure 3. Current and planned top infrastructure add-ons in Europe and North Africa Top Add-ons For Hosted Servers Server Backup Database Add-ons Security (Antivirus/ Antispam) Control Panel Planned Top Add-ons Server Backup Security (Antivirus/Antispam) Database Add-ons 4

7 Web Presence and Web Applications The web presence and web applications market continued strong growth over , reaching $3.7B USD and growing 27%. This growth again came largely from the maturing markets, where over 50% of SMBs have yet to add a website. By 2016, maturing markets will make up over 60% of spending in web hosting and related web add-ons, continuing to grow over 25% per year. Mature markets will grow less than 10% and will be driven by the sale of a range of web applications and add-ons. Table 2. Europe and North Africa SMB Opportunity in Web Presence Mature Cloud Services Maturing Cloud Services Current Website Penetration Rate Third-Party Hosted Website Penetration Rate Compound Annual Growth Rate (3 year) 2013 Percentage of Europe 2016 Percentage of Europe 76% <45% 60% >30% 9% 27% 50% 49% 38% 61% 2013 Market Size (USD) $2.4B $2.3B 2016 Market Size (USD) $3B $4.8B For all SMBs, including cloud expanders, who already have hosted websites, additional opportunity will come from offering SMBs web applications and add-ons to strengthen their web presence. According to Parallels research, the most popular web applications are search engine optimization, security and health monitoring, and content management systems. Through 2016, many web applications will be popular, as SMBs look for new ways to enhance and secure their websites. The top three add-ons across the region will be mobile optimization, search engine optimization, and ecommerce capabilities. Figure 4. Current and planned top web application in Europe and North Africa Fastest Growing Web Apps Through Mobile Optimization SEO Ecommerce 5

8 Mature Markets 41% Market Growth Maturing Markets 80% Market Growth Opportunity for 2016 by Cloud Category Mobile optimization, in particular, is worth mentioning in more detail. $13.1B Smart $5.5B phone and tablet use is wide spread across $5.1B Europe and North $7.9B $9.9B $4.7B Africa, meaning that many consumers $1.5B $5.8B first access an SMB s website $37B from one of these devices. Despite this, a full 72% of SMBs don t Cloud have 2016 Opportunity websites that 33% display properly 18% on mobile devices, making 19% this a top need CAGR CAGR CAGR 2013 for many SMBs. This trend feeds into mobile 56% optimization applications $16.8B CAGR Current Market Size being the most Infrastructure popular as web Web application Presence & Communication to add & over Business the next several a Service (IaaS) Web Applications Collaboration Applications years for SMBs in Europe and North Africa. Figure 4. Mobile optimization trends in Europe and North Africa 32% No Mobile Optimization 28% Mobile Optimized 40% PC Only Optimzed Over 70% of SMBs Don't Have Websites That Display Properly on Mobile Devices Finally, we want to touch briefly on how and when SMBs are buying web applications. The majority of SMBs in Europe and North Africa are buying web applications from their web hoster, with less than 30% going directly to the web application provider (ISV) or to another third party. However, it turns out that as many as 41% of SMBs buy their web applications 50% + bundled with > their 40% websites, Growth making the initial web hosting of SMBs transaction Use Hosted a crucial time in Mature to and sell Maturing additional Markets add-ons to Servers as Web Servers these businesses. This trend is especially true of micro SMBs (those with less than 10 employees); these companies rarely come back to their web hoster for more services after their initial web hosting purchase. Small and medium SMBs, on the other hand, are more likely to return, making them a good target for upsell campaigns. Figure 5. SMB purchase patterns for web applications SMBs are More Likely to Buy Web Apps with Initial Website Purchase vs. Post-Purchase 30% 36% 41% 31% 24% 15% Bundled with Website Purchase from Hoster Return to Hoster for Subsequent Purchases Micro (1-9 Employees) Small (10-49 Employees) Medium ( Employees) CAGR Growth by 2016 in 27% Maturing Markets Web Presence Opportunity in $4.8B Maturing Cloud Services Market 6

9 Hosted Communication and Collaboration In the area of hosted communication and collaboration, we again focused our research on two areas: hosted premium and hosted PBX. In Europe and North Africa, the SMB market for both of these services is still small in comparsion to the IaaS and web presence markets, but it is growing rapidly. The hosted communication and collaboration market is currently $1.5B USD and grew 30% over the past year. Over the next three years, we see this market as being the fastest-growing of all the cloud service categories, more than tripling to $5.8B USD, with over 70% of this spending in maturing cloud service market (see Table 3). Table 3. Europe and North Africa SMB Opportunity in Hosted Communication and Collaboration Mature Cloud Services Maturing Cloud Services Hosted Hosted PBX Hosted Hosted PBX Current Hosted Penetration Rate Premium Hosted Penetration Rate (Paid) Compound Annual Growth Rate (3 year) 2013 Percentage of Europe 2016 Percentage of Europe 2016 Percentage of Europe 57% 40% 6% 12% 7% 37% 70% 42% 57% 28% 71% $645M $846M 5% 2016 Market Size (USD) $1.6B $4.1B Hosted The hosted market in Europe and North Africa is still quite small. In mature market countries, over 50% SMBs have hosted , but only 12% pay for hosted premium . In the maturing countries, the portion of SMBs with hosted at about 40% or less, and just 7% SMBs pay for hosted premium . With such low penetration, this market presents a large opportunity as it grows and more SMBs realize the advantages of having a hosted premium account. According to Parallels research, at least 30% of those who do not use hosted premium , might add it in the coming years. Service providers should focus on the following areas to capture this growth opportunity: 1. Understand SMBs purchase triggers. Two of the best areas of opportunity in upcoming years will be converting SMBs from in-house servers and upgrading them from free hosted . In order to capture these customers successfully, service providers need to understand what events will cause SMBs to purchase hosted premium . Parallels found that across Europe and North Africa, an attractive price point, the need for the enhanced security features of premium , and need for a 7

10 professional look-and-feel from communications were the most common purchase triggers (see Figure 6). 2. Market hosted premium features that are important to SMBs. In addition to knowing purchase triggers, service providers need to know what features of hosted premium are most attractive to SMBs, so that they can lead with these features in their marketing materials. As shown in Figure 6, the most popular features for hosted premium are enhanced security, mobile integrations (managing from smart phones and other devices), and archiving. Figure 6. Popular premium hosted features and purchase triggers Top Premium Features For SMBs Security Mobile Access Archiving Shared Calendar 60% Top Triggers for SMBs Buying Hosted Premium 40% 20% 0% Good Price Point Increased Security Professional Look Company Adds Employees Micro (1-9 Employees) Small (10-49 Employees) Medium ( Employees) Hosted PBX Hosted PBX is still emerging as a major cloud services and as a result the market remains very small throughout Europe and North Africa. Over the past year, the hosted PBX penetration rates has grown from 4% to 5-6%, in both mature and marketing regions. As more SMBs become aware of hosted PBX and the benefits it can offer to their businesses, Parallels sees vast opportunity for service providers focusing on hosted voice services. With many SMBs indicating an interest in adding hosted PBX in the next few years, these following strategies can be used strengthen and maximize the opportunity for growth in the hosted PBX market for Europe and North Africa: 1. Help overcome SMBs concerns about the service. Over the past year, SMB concerns about the price of hosted PBX and its technical capabilities have declined, as the service becomes more mainstream. However, security concerns remain unchanged, with more than 25% of SMBs citing it as a concern, and over 40% are still concerned about price. Offering low cost packages and educating SMBs will drive hosted PBX market growth over the next several years. 2. Understand common hosted PBX purchase triggers. Like hosted premium , knowing the top reasons that SMBs would purchase hosted PBX can help service providers determine the highest-value SMB targets to pursue and thereby boost their new customer growth. As shown in Figure 7, the leading purchase 8

11 triggers are having a broken or unreliable existing in-house PBX system, followed by an attractive price point. For medium SMBs in particular, adding new locations to the business and having explosive business growth are also key purchase triggers. Figure 7. Popular hosted PBX purchase triggers Top Purchase Triggers for Hosted PBX Medium Business Triggers Existing PBX Old/Unreliable Price Adding/Changing Office Locations Company Growth Business Applications Business applications are the second largest cloud service category, after IaaS, at a current market size of $5.1B USD. The business application market grew 33% over the course of Parallels research shows that 50-70% of SMBs in Europe and North Africa are using business applications of some type. Unlike many of the other cloud service categories, where maturing markets will be gaining on mature markets over the next several years, in business applications, mature market countries are and will remain over 60% of the overall business application market size through The overall market size will grow 25% yearover-year through 2016 and will nearly double to reach $9.9B USD. Table 4. Europe and North Africa SMB Opportunity in Business Applications Mature Cloud Services Maturing Cloud Services Current Penetration Rate >70% >50% Compound Annual Growth Rate (3 year) 2013 Percentage of Europe 2016 Percentage of Europe 27% 22% 60% 40% 64% 36% 2013 Market Size (USD) $3B $2B 2016 Market Size (USD) $6.3B $3.6B Europe and North Africa SMBs report that their top business applications currently are file sharing, phone conferencing, instant collaboration, and online backup and storage. Over the next several years, SMBs are interesting in adding a similar mix of applications as shown in Figure 8. A range of line of business applications, like support/help desk, online accounting, and payroll / HR application, will also be growing rapidly over the next three years across the region. 9

12 70% 25-50% $4.1B Growth Across Entire Europe Communication & Collaboration Growth of Premium and North Africa Region for PBX Market Opportunity in in Mature Markets Maturing Markets Figure 8. Current and planned top businss applications in Europe and North Africa BUSINESS APPS Top Apps For Business File Sharing Phone Conferencing Instant Collaboration Online Backup & Storage Fastest Growing Business Apps Through 2016 Backup & Storage Instant Collaboration Phone Conferencing File Sharing Cloud Based Line of Business Apps such as Support/Help Desk, Accounting, and Payroll are Seeing Rapid Growth Across the Region Line of Business When asking SMBs about their SaaS purchase behavior, Parallels discovered three interesting preferences among SMBs: 36% 29% 15% 1. Price and brand are generally considered equally important when purchasing applications. Service providers must balance both aspects in their business application offerings. 2. Over 50% of Over SMBs 50% prefer Prefer to to purchase Buy Bundled applications as part of a bundle. Cloud Services/Applications Preference tends to be highest Across in Region maturing market countries, like Spain. $9.9B Business Apps Market Opportunity Share of Mature 64% Markets 3. SMBs are more likely to purchase paid versions of applications after using a free trial. Free trials with full functionality for a limited term of time are also much more likely to convert SMBs to paying customers than freemium model applications, where limited functionality or features are given for an unlimited period of time (See Figure 9). Figure 9. SMB purchase of business applications Over 63% of SMBs First Try an Online Application for Free Before Buying 2013 Parallels IP Holdings GmbH. All rights reserved. The Parallels logo and Parallels are registered trademarks of Parallels IP Holdings GmbH. No part of this publication may be reproduced, photocopied, stored on a retrieval system, or transmitted without the express written consent of Parallels. Europe and North Africa Average 36% 29% 15% Yes, I Purchased When the Trial Expired No, I Purchased Without Free Trial Yes, I Purchased to Have Access to More Product Features With these preferences in mind, service providers can take advantage of the high demand for business applications across Europe and North Africa. For other country-specific business application opportunities, refer to the Parallels SMB Cloud Insights reports for the country or countries in which you re interested. 10

13 Conclusion The Europe and North Africa SMB cloud services market grew 33% during the past year, reaching $16.8B USD in the summer of The cloud services market will continue to grow across the region, especially in many countries with maturing cloud markets that are steadily catching up to the rest of developed Europe in their use of cloud services. Over the next several years, we see a shift in high growth from traditional hosted services toward new cloud services that help SMBs grow their businesses and increase their productivity particularly communication and collaboration and online business applications. Driven by grown of these cloud service categories, the entire market will continue to grow solidly at 30% year-over-year, to reach $37B USD in As a result, Parallels sees excellent opportunities for service providers who are able to adapt to the changing cloud services landscape and offer SMBs the widening range of cloud services and applications they need. Learn more This Parallels Market Outlook for 2013 report only covers a portion of the extensive data included in Parallels SMB Cloud Insights research. Custom analyses from our entire research database are available for Parallels Partner community members upon request. For more information, please reach out to your sales account manager or us directly at SMB@parallels.com. You can also learn more by: Visiting Parallels PartnerNet. For Parallels Partners, register for Parallels PartnerNet and go to the SMB Knowledge Center for more SMB Cloud Insights data analysis and go-to-market materials. Find Parallels PartnerNet at Attending an SMB Cloud Insights webinar. Register for our monthly webinar series highlighting Parallels research and teaching SMB marketing strategy, tips, and best practices to help grow your hosting business. Go to about/subscribe/ to sign up for webinar notifications. Talking to Parallels Business Consulting team. Parallels Business Consulting delivers services designed to accelerate time-to-revenue by 20-35%, increase profits, and grow subscribers. We provide critical business thinking and best practices forged from hundreds of deployments, custom research by SMB Cloud Insights, and go-to-market workshops. Start a conversation with Parallels Business Consulting team. Get in touch at accelerate@parallels.com. Please contact SMB@parallels.com with any further questions. 11

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15 2013 Parallels IP Holdings GmbH. All rights reserved. The Parallels logo and Parallels are registered trademarks of Parallels IP Holdings GmbH. No part of this publication may be reproduced, photocopied, stored on a retrieval system, or transmitted without the express written consent of Parallels. About Parallels Parallels enables service providers to rapidly launch and efficiently deliver the most profitable cloud services by automating the delivery of the broadest set of solutions demanded by small businesses. Founded in 1999, Parallels is a fast-growing company with 900 employees in North America, Europe, and Asia. For more information, please visit 13

16 Global Headquarters 500 SW 39th Street, Suite 200 Renton, Washington USA main: Europe & Northern Africa Willy-Brandt-Platz Munich Germany main: HostingSales.eu@parallels.com APAC 3 Anson Road, #36-01 Springleaf Tower Singapore main: HostingSales. apac@parallels.com For more office locations: 14