English - Parallels

2014
Parallels SMB Cloud Insights
Mexico
TM
DEFINITIONS
Cloud Services Categories
This research is focused on the cloud services that matter most to SMBs: IaaS, web
presence and web applications, unified communications, and a general category we
refer to as business applications.
Infrastructure as a service (IaaS): Dedicated servers, virtual private
servers (VPS), managed hosting, as well as add-on applications and
services for hosted infrastructure, such as control panels, development
platforms, LAMP stack (Linux, Apache, MySQL, PHP), security, server
backup, and database add-ons. Includes cloud servers as of 2014, due to
their increasing use among SMBs.
The overall Mexican Cloud Market Reached
₱8.5B in 2014
₱5.2B
₱8.5B
2013
2014
($415M)
($657M)
Web presence and web applications: Third-party web hosting,
domain registration, SSL and ecommerce add-ons, site-building tools,
high-opportunity web applications – web server backup, content delivery
networks (CDN), content management, mobile optimization tools, search
engine optimization (SEO), and web server security and health monitoring.
Unified Communications: Business-class email services, including
email security, email archiving, along with mobility and hosted phone
services, including hosted PBX. As of 2014, includes communication and
collaboration applications, such as web and phone conferencing, instant
collaboration, and mobile device management (MDM).
Business applications: The major types of software applications that
can be accessed online—file sharing, online accounting, online backup and
storage, online CRM, payroll and HR, support and help desk, and virtual
desktop (VDI).
SMB Definition and Segmentation
We define SMBs—also known as small and medium enterprises (SMEs) - as companies
with 1 to 250 employees. There are around 2M such SMB establishments in Mexico today.
Segments include: micro (1-9 employees), small (10-49 employees) and medium (50-249
employees)
Cloud Opportunity Type
Cloud leapers: This category consists of SMBs that currently are not using
an in-house IT solution (no servers, no web server, or no PBX system) and are
likely to move straight to the cloud, “leaping over” the intermediate in-house
IT solutions. The cloud leaper category also includes startups that choose
cloud services over traditional in-house IT as they start their business.
Parallels SMB Cloud Insights has entered its fourth consecutive
year of research into the cloud service consumption of SMBs. In
2014, Parallels has updated its research by redefining some of the
categories examined. Infrastructure-as-a-Service now includes the
use of cloud servers by SMBs, which wasn’t previously measured
due to cloud servers being considered an enterprise level solution.
But SMBs are also beginning to take advantage of them as a
scalable and flexible solution. Unified Communications, previously
called Communication and Collaboration, now includes collaboration
applications.
In 2014, the Mexican SMB cloud market reached approximately
₱8.5B MXN ($658M USD). The current largest portion of the overall
market, Infrastructure-as-a-Service, climbed to ₱2.8B MXN ($213M
USD) in 2014. Web presence and web applications reached ₱1.8B
MXN ($135M USD). Unified communications slightly surpassed
web presence, adding another ₱1.8B MXN ($137M USD). Business
applications is the second largest category, making up the remaining
₱2.2B MXN ($173M USD).
Cloud converters: These SMBs currently have in-house solutions but are
either moving or planning to move to hosted services. For example, many
SMBs that currently have in-house servers may switch to hosted servers
when it comes time to upgrade their infrastructure.
Cloud expanders: These SMBs, who are already using some form of cloud
services, represent an opportunity for upselling to new and expanded cloud
offerings. For example, an SMB who is using web hosting would be acting as
a cloud expander when they purchase mobile optimization to complement
their website.
1
INFRASTRUCTURE-AS-A-SERVICE (IaaS)
IaaS Market Growth
Hosted Servers are Mainly Used for Same
Purposes as Last Year
₱1.6B
₱2.8B
2013
2014
($125M)
($213M)
1
₱520M
($42M)
Cloud Servers
38%
2
28%
Database
Applications
Web Server
laaS Grew by 43%
Accounting
SMBs are Willing to Pay More for High
Availability or Unlimited Storage
23%
21%
32%
29%
Security Replaces Price as the Top Concern
for Switching to Hosted Servers
SMBs Concerned About Switching
High Availabity
Unlimited Storage
21% of SMBs would
pay $20/mo more for
high availability
23% of SMBs would
pay $20/mo more for
unlimited storage
$10
$20
Top Hosted Server Add-ons
Price
Security
2013
In-House Apps
2014
IT Personnel
Doesn’t
Recommend
Security/privacy and price are still the main concerns for businesses
with in-house servers when considering switching to IaaS. However,
fewer SMBs reported these barriers to switching than in 2013. The
proportion of SMBs worried about bandwidth/connectivity or certain
apps not being supported through hosted server use increased
slightly, but remained a barrier for less than 10% of potential
converters. Service providers should keep these concerns top of
mind when marketing to SMBs who are considering switching from
in-house servers to hosted solutions.
2
24%
2014 Usage
Infrastructure-as-a-Service grew to ₱2.8B MXN in 2014. This market
mainly increased due to cloud leapers, or SMBs without servers
jumping right to IaaS for infrastructure. Of note, ₱520M MXN ($41M
USD), is attributed to the addition of cloud server use in this category.
Though cloud servers were previously considered to be an enterprise
level solution, Parallels has found that almost 20% of SMBs using
IaaS in Mexico are using cloud servers.
50%
40%
30%
20%
10%
0
3
2014
2017
37%
Security
Control Panel
31%
Database Add-Ons
Security
Server Backup
Database Add-Ons
84%
63%
36%
62%
Security to Remain Highest Priority for SMBs with Hosted
Servers When Choosing Add-ons
3
WEB PRESENCE
IaaS Opportunity Through 2017
Web Presence and Web Applications
32%
3 Year CAGR
₱1.3B
₱1.8B
2013
2014
($107M)
77% 68% 63%
Cloud Leapers
New Adoption
Cloud Expanders
Increase Spending
Cloud Converters
Switch From In-House
With a projected 2017 market size of ₱6.3B MXN
($484M USD) and growing at 32% CAGR, IaaS will
be the second largest part of the overall SMB cloud
market in Mexico. By 2017, we predict IaaS could
include up to 63% of cloud converters, 68% of cloud
expanders wanting to spend more on their existing
IaaS, and 77% of SMBs who don’t yet have servers
of any kind. Each of these three segments presents
excellent opportunity in the coming years but will
require unique marketing messages.
₱6.3B
($484M)
CAGR 17%
($135M)
Mexico has a developing cloud market, and web presence has
been growing at higher rate than in more developed markets, as
SMBs get internet access and add websites. In 2014, the Mexican
web presence market reached ₱1.8B MXN ($135M USD), up 31%
from last year. Many SMBs added their first websites as third party
hosted websites in 2013, particularly micro and small businesses,
contributing to this market growth.
41%
Of SMBs Buy Web Apps
Bundled with Website
Purchase
Ecommerce and Mobile Optimization to
Increase in Demand Through 2017
Top Web Apps
2014
Security
SEO
Content Management
SEO
Ecommerce
Mobile Optimization
2017
4
5
WEB PRESENCE
Top Forms of Social Media Growth in 2014
7%
4%
4%
Mobile Optimized Websites are Growing in
Popularity – and Many SMBs Still Need One
28%
No Optimization
Needed
Facebook
Twitter
37%
Mobile Optimized
26%*
LinkedIn
PC Only Optimzed
SMBs are Starting to Use More Third Parties
to Design and Manage their Websites
35% 55%
Web Designer
Designed By
Web Presence Opportunity in 2017
Sitebuilder
42% 10%
Web Hoster
*Best Opportunity
3rd Party
Managed By
29%
3 Year CAGR
91% 64% 61%
Cloud Leapers
22%
New Adoption
Of Medium Businesses
Manage Their Site Through
Third Parties
35% of micro SMBs use a web designer or third party to design their
websites, and between 55-65% of small and medium SMBs are using
web designers. While more SMBs manage their websites and web
apps by logging in at their web hoster, 10% of SMBs (22% of medium
businesses) have a third party manage their websites for them. SMBs have
begun trending toward more managed web hosting in developed markets,
and it’s catching on in developing markets like Mexico.
6
Cloud Converters
Switch From In-House
Cloud Expanders
Increase Spending
While all SMB segments present ample opportunity
for the Mexican web presence market over the next
three years, cloud leapers will be the main drivers
of growth. Of note, 91% of SMBs without websites
indicate interest in adding them by 2017. Mexican
web presence is projected to reach ₱3.8B MXN
($292M USD) by 2017, growing at 29% CAGR.
₱3.8B
($292M)
7
UNIFIED COMMUNICATIONS (UC)
Unified Communications Market Growth
₱1.8B
($137M)
₱430M
₱939M
Hosted PBX
Collaboration Apps
($33M)
₱408M
($31M)
What Features are Most Useful to SMBs in
Hosted PBX Systems?
($72M)
Hosted Email
₱1.1B
($82M)
2013
2014
Ability to Track
Billable Calls
₱1.8B ($137M)
Unified Communication
Unified communications, formerly communication and collaboration,
now includes instant collaboration, web/phone conferencing, and
mobile device management (MDM). This market grew significantly
from ₱1.1B MXN ($82M USD) to ₱1.8B MXN ($137M USD). Hosted
email, instant collaboration and web conferencing have been the main
drivers of this growth. For example, in 2013, we saw many cloud
expanders switch from free to paid hosted email while many SMBs
without email opted for hosted premium for their first solution.
At What Point
Would SMBs
Choose to Switch
From Free Email
to Paid Business
Email?
46%
Need
Professional
Look and Feel
30%
Need Increased
Security
What Features Caused SMBs to Choose Paid
Business Email Over a Free Email Provider?
13%
14%
Shared
Calendar
8
Calendar
Alerts
48%
50%
71%
Seperate Phone
Lines
Overall Concerns About Hosted PBX Have
Increased
60%
50%
40%
30%
20%
10%
0
SMBs Concerned About Switching
Price
Security
In House
Apps
2013
Archiving
Technical
Unaware of
PBX
2014
What are Major Purchase Triggers
for Hosted PBX?
38% 33%
Good Price
Outlook
Integration
One Mailbox for
Messages
Major Change to
Business
Security
9
BUSINESS APPLICATIONS
As shown above, nearly all of the concerns SMBs have about
switching from in-house PBX to a hosted option have increased
dramatically. They have reservations about the price and security of
hosted PBX. Additionally, many of them just don’t know much about
it. However, 38% of SMBs would be likely to switch to hosted PBX
if they could afford it, or if there were a major change to business
and switching away from in-house proved to be a better option. In
developing regions like Mexico, many SMBs opt for mobile phones
as an inexpensive option. Service providers will want to continue
educating their customers about the security and convenience
benefits of hosted PBX, and offer low cost options that will appeal to
SMBs to capture those potential converters.
Business Applications
₱1.2B
($95M)
2014
₱2.2B
38%
($173M)
2014
Increase in
Overall Business
Application Use
Unified Communications Through 2017
94%
75%
73%
82%
60%
54%
71%
3 Year CAGR
49%
15%
Cloud
Expanders
Cloud
Converters
Hosted Email
Cloud Leapers
Hosted PBX
Web/Phone
Conferencing
19%
29%
Instant
Collaboration
New Users
The Mexican UC market is poised for tremendous
growth with a 54% CAGR through 2017. It is
projected to become the largest part of the Mexican
SMB cloud market reaching ₱6.7B MXN ($514M
USD). Growth is being driven by all segments
across all services. For example, over 60% of SMB
leapers, converters, and expanders for hosted
email as well as hosted PBX express an interest in
adoption or increasing spending. Additionally, 49%
of existing web/phone conferencing users said they
plan to increase spending over the next three years.
16% 15%
In 2014, the business applications market hit ₱2.2B MXN ($173M
USD), up from ₱1.2B MXN ($95M USD) in 2013. Overall use of
business applications increased from 29% to 40% among SMBs,
along with increased adoption in different apps among different SMB
size segments. Top applications in 2014 include file sharing and online
backup and storage, but accounting has replaced payroll as the third
most consumed app.
File Sharing and Online Backup Consistently Important
Mobile Device
Management
Increased Spending
₱6.7B
Payroll
2013
2014
($514M)
Accounting
File Sharing
Where Do You Buy Online Applications?
52%
10%
Application Telco/Mobile
Website
Provider
10
Online
Backup/Storage
9%
9%
IT
Consultant
Web
Hoster
6%
Online
Retailer
11
BUYING CLOUD SERVICES
Free Trial Important for Converting SMBs to
Purchased Versions
21%
44%
Purchased without
free trial
Purchased after
free trial to access
more features
50%
Say Service
Provider Choice
is Their Main
Concern About
Buying in
Bundles
of SMBs
of SMBs
Business Applications Opportunity in 2017
43% 34%
29%
3 Year CAGR
45%
of SMBs
33%
of SMBs
Say Ease of
Billing is More
Important than
Discounts
When
Purchasing
Bundles
Quote Cost
Transparency
as Their
Main Barrier
to Bundle
Purchases
Many SMBs prefer buying cloud services as bundles, but what about
those who don’t? This year Parallels asked SMBs about bundling
preferences. We discovered that when SMBs choose not to bundle,
it is because they want choice in the service provider or brand and
are concerned about lack of transparency in bundle pricing. SMBs
are willing to pay more to get the exact service or brand they want.
Service providers can still attract these SMBs with bundles, so long
as they offer a variety of best of breed bundled options.
47% of SMBs Use Only One Service Provider
50%
40%
30%
20%
New Adoption
The business applications market is projected to
more than double by 2017. Growing at a similar
rate to the web presence market, it will likely
expand to ₱4.8B MXN ($368M USD). Both new
adoption and increased spending appear to be
good areas of opportunity. For example, 34%
of SMBs said they would like to add various
business apps, and 43% want to increase their
spending on apps they currently use. Parallels
expects this market to continue going strong as
SMBs grow and their needs mature.
12
45%
Prefer
Purchasing
Bundles as
Opposed to a
la Carte
Purchased after
free trial expired
21%
Increase in Spending
To Bundle or Not to Bundle?
10%
0%
₱4.8B
1
2
3
4
5
6
Number of Service Providers
($368M)
74%
of SMBs say
Better Cost Value is Top
Benefit of Using One
Service Provider
49%
of SMBs say
Unified Support
is Also Important
13
OPPORTUNITIES
How do SMBs Contact Their Service Providers?
70%
53%
64%
33%
Learn More
This Parallels Market Outlook for 2014 report only covers a portion of the
extensive data included in Parallels SMB Cloud Insights™ research. You can
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 www.parallelsnetwork.com.
Phone Calls
Email Support
Online Chat
In-Person
The Mexican Cloud Services Market is
Projected for 36% Growth Over the Next 3
Years
₱8.5B
₱21B
($1.7B)
($658M)
2014
36%
3 Year CAGR
• Attending an SMB Cloud Insights™ webinar. Register for our
webinar series highlighting Parallels research and teaching SMB
marketing strategy, tips, and best practices to help grow your hosting
business. Go to www.parallels.com/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 [email protected]
Please contact [email protected] with any further questions.
Parallels is committed to helping our partners understand the best
opportunities in the SMB cloud market and profit from the cloud.
2017
The Mexican SMB cloud services market is forecasted to grow at a 36% CAGR and
to top ₱21B MXN ($1.7B USD) by 2017. Each cloud service category will play a major
role in the overall growth, with unified communications taking the lead with the fastest
growth and surpassing IaaS as the largest market size. IaaS will still be a close second,
however. Web presence and business applications will also each continue to have strong
growth, doubling in size within the next three years. With many areas of potential among
the various SMB segments and across cloud categories, this developing hotspot has
immense prospects for service providers.
© 2014 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.
14
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