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IBM, Google to Poach on Microsoft's Territory

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Big growth expected in small-business market.

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Attention entrepreneurs: Big Blue and Google want you.

The market for small- and medium-sized businesses is expected to grow about 6.7% per year, reaching $674 billion by 2013. This is prompting major hardware, software, and Internet companies to offer new products and services.

In the past, major companies have generally ignored these enterprises, because blue-chip companies could spend millions on a single order.

The great unknown for companies entering the market: Will smaller companies buy software that runs an on-site server, or will entrepreneurs prefer to tap into hosted services via the Internet?

IBM (IBM) and Google (GOOG) plan to enter a market long flooded with Microsoft (MSFT) products.

IBM offers on-site systems than can run Windows or open-source Linux applications. Big Blue also offers hosted services, such as an Internet-based social network that helps companies link to their clients and partners.

Microsoft's Office suite of programs now includes collaboration tools designed to function on a company-owned server running Windows or can be delivered online for a fee.

Google is placing its bet on Google Apps. The company's App Synch allows Microsoft Outlook users to run Google Apps at the same time. In addition, Google Apps is woven into Android, the OS for Google's G1 phone. This looks like an effort to spread the G-phone beyond the technological cognoscenti. If successful, the move is likely to generate big bucks for Google while putting a powerful new tool in the hands of entrepreneurs.

Innovative companies have also established themselves in the market with hosted services including, Intuit (INTU), NetSuite (N), and Salesforce.com (CRM). The pitch: Hosted services enable small- and medium-sized companies to concentrate on their core business. So far, it looks like a good bet. The price is right for Linux software, but unless you know what you're doing and have time to fiddle with it, many entrepreneurs say, "Why bother?"

The on-site versus hosted-services debate is likely to simmer, because there's no single answer for all companies. In short, one size doesn't fit all. What's clear is that new entrants into the field will mean more and better applications for entrepreneurs at attractive prices.

You can bet there won't be any cries from the private sector for a government-run software initiative followed by exhaustive Congressional hearings on what small – and medium-sized businesses might need by 2020.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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