Small and medium enterprises (SMEs) represent a growing and increasingly important market sector in SA, according to Mark Lu, CEO of Rectron, one of SA`s major computer product distributors.
He says that encouraged by the South African government, financial institutions and those involved in business development, the sector is becoming more inviting and an obvious target for organisations looking for new marketing opportunities.
"The SME space is important for SA because it holds huge job creation potential," stresses Lu. "In the IT industry, more vendors and distributors are targeting SMEs because they have recognised their long-term viability.
"However, to be successful, vendors and their partners will have to adopt new sales, marketing and support strategies because SMEs represent a significantly different market - from a corporate culture perspective - when compared to the characteristics of their larger rivals."
He says SMEs generally operate in highly competitive environments where profit margins are cut to the bone. This has the effect of making them less loyal to their channel partners and suppliers than their larger counterparts. They constantly search for the lowest cost option - not the best solution for the application.
"Vendors have to come to terms with the fact that SMEs require budget priced products that are nevertheless capable of delivering `big business` solutions with the quality to match," he says.
"The pressure is on vendors to reduce prices and design more cost-effective products specially for this sector, while remaining profitable in their own right."
He points to a number of examples where big business has taken this course. "Telkom is poised to reduce the cost of its ADSL service because it is a business driver in the SME space and, currently, it is seen as too costly for the average enterprise.
"And in the computer market, there is a proliferation of `all-in-one` machines that are capable of handling multiple functions within the confines of a single, more cost-effective, device."
He says good examples are also found in the corporate networking arena with the advent of new technology `all-in-one` wireless gateway/ router/ firewall/ security products that are also more affordable for smaller users.
He says office equipment vendors are increasing their emphasis on "all-in-one" fax-copier-printer-scanner offerings, which are now also colour enabled.
"At the same time, prices are falling rapidly, driven by the needs of the SME users," he notes. "An all-in-one office machine today retails for around R4 000, about the same price as the individual machines did only a few years ago.
"The downward price spiral is most evident today in the portable PC market, where a good quality laptop computer sells for between R5 000 and R6 000, virtually the same price as a fully-featured desk-top machine of less than two years ago.
Lu adds that new technologies, such as voice over the Internet Protocol (VOIP), 3G and GPRS are driving the popularity of new mobile phones and mobile computers - all of which are targeted at executives "on the move" who characterise the SME landscape in SA.
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