AMI-Partners Uncovers U.S. SMB Linux Users Profile, with Larger SBs and Smaller MBs Showing an Affinity for Linux.

NEW YORK -- Professional Business Service-Based Companies Lead in Linux Adoption; Older Windows Server Installations May Be Threatened

The U.S. PC-owning small and midsize business (SMB) market is a diverse group of companies that totals approximately 5.8 million entities. While Linux is not yet being embraced by the broad market, AMI's research shows that Linux penetration is higher within specific segments. Companies with 100 to 249 employees exhibit the highest penetration (24%), while less than 5% of companies with fewer than 10 employees report either owning or planning desktop or server Linux. Further, the research shows that 16% of SMBs in professional business services industry report using Linux -- the highest among all industry groups.

The above findings were released today by New York-based Access Markets International (AMI) Partners, Inc. based on its surveys of SMBs in leading developed and emerging market countries that account for almost three-fourths of total SMB IT spending. AMI is a leading consulting firm that specializes in IT, Internet, telecommunications and business services market intelligence -- with a strong focus on global small and medium business (SMB) enterprises. AMI-Partners conducts the industry's most comprehensive annual tracking surveys of SMBs in more than 20 countries, including North America (U.S. and Canada); Europe (U.K., France, Germany, Czech Republic, Poland and Russia); Asia-Pacific (Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Singapore, Taiwan and Thailand); and Latin America (Mexico and Brazil).

AMI's new Linux data and analysis are detailed in a just-published study titled U.S. SMB Linux Adopter Profile. Highlights from the report include:

--U.S. SMBs owning or planning Linux desktops or servers have twice the number of employees as those not owning or planning Linux in the next 12 months.

--Those SMBs owning/planning Linux desktops or servers have twice the annual revenue as those not owning or planning Linux in the coming year.

--Linux-owning SMBs in the U.S. exhibit more than three times the IT spending of those that do not own Linux. They are also more aggressive in upgrading PCs and servers. Over half of Linux-owning SMBs expect to upgrade up to 20% of the server installed base with a new OS.

--Linux-owning SMBs show a marked preference for specific vendors when it comes to purchasing desktop and server PCs.

"Linux is clearly gaining a home among larger SMB entities that are in a position to handle the current level of complexity and able to invest in retaining internal IT staff. The hypothesis that Linux is only finding a place in very large enterprises is not true. Companies with 100 to 249 employees are more likely to turn to Linux and open source in the face of tight IT budgets and ever-increasing business requirements," observed Abhijeet Rane, Senior Vice President at AMI-Partners. "This forms the very core of the MB market," added Mr. Rane.

The Server Opportunity

Primary interest in Linux among SMBs is on the server side of the IT equation. The projected increase in servers running Linux as reported by respondents of the survey appears to coincide with the planned retirement of older installed base of Windows 2000 and Windows NT servers. Older servers dedicated to functions such as file and print sharing could be replaced by servers performing the same functions under Linux. Web site and intranet servers are also a likely target.

"SMBs are being pragmatic when it comes to choosing a server OS. Where not restricted by existing applications, SMBs will potentially turn to Linux to lower costs, but will shy away from mass migration. The upside for Linux vendors is nonetheless high," said Rane.

In addition, the "first server" opportunity also remains robust. Currently, only 33% of the U.S. SMB market reports owning server-based LANs. The remainder, comprised primarily of small businesses with fewer than 100 employees, constitutes a significant revenue opportunity. Along with increasing adoption of Linux on server, Linux-owning SMBs expect to increase their adoption of Windows 2003 servers.

About the Study

U.S. SMB Linux Adopter Profile is being released under the aegis of AMI's Sector Focus: SMB Linux and Open Source practice. The report presents a U.S. profile covering SB and MB segments, and enables clients to correctly profile users of Linux and open source applications. Data points include number of PCs, number of servers, demographic variables such as annual revenue, revenue growth, and number of users. The study also forecasts shipments and installed based of Linux desktops and servers.

For additional information about AMI's U.S. SMB Linux Adopter Profile, please contact Harshit Mehta at 212-944-5100, ext. 511, or [e-mail].

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence -- focusing on global small and medium business (SMB) enterprises. The AMI-Partners mission is to empower clients for success with the highest quality data, business planning and "go-to-market" solutions. AMI was founded in 1996 under the name of Access Media International (USA), Inc. by Andy Bose, formerly a group vice president at IDC. Since its inception, the firm has built a world-class management team, each with ten to fifteen years' experience in IT, telecom, online communications or multimedia.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last eight years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB tracking surveys in more than 20 countries; and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.

For more information on AMI-Partners or our global SMB surveys, please visit www.ami-partners.com or call 212-944-5100.