Hostway's “Stealth Revolution” Report Shows Internet Driving Under-the-Radar Business Transformations for Small and Mid-Sized Businesses

Emerging generation of Web-based businesses provides sharp contrast to U.S. manufacturing decline.

Chicago, IL—Tuesday, April 25, 2005—As National Small Business Week 2005 begins today, a new report from Hostway Corporation finds small and mid-sized businesses (SMBs) leading a "Stealth Revolution" powered by the ever-expanding use of the Web to manage and grow their businesses.

Hostway's report, "The SMB Stealth Revolution," is available for free and unlimited download.

The Web-powered SMB developments identified in Hostway's report go far beyond just the "wiring" of existing small enterprises.

Growing evidence points toward the emergence of an entirely new generation of highly targeted, niche-focused Web-centric SMBs. These firms not only leverage new technology, but they take advantage of increasing consumer willingness to make online purchases from small companies. This combination has enabled entrepreneurs to develop innovative, Web-based business models - and even includes the launch of companies that have found ways to counter the long-standing decline of U.S. manufacturing.

"The strategic use of technology is no longer just the domain of big enterprises," says John Lee, Hostway's vice president of marketing. "The rollout of new Web-delivered and Web-based services is accelerating. And as it happened with many earlier technologies like personal computers, desktop publishing, e-mail and e-commerce, innovative small businesses are in the vanguard of taking advantage of the new capabilities."

However, despite SMBs' willingness to embrace new Web-powered tools, the process of sorting through the explosion of technology options can be overwhelming for many small enterprises.

"In the next 12 months, SMBs are going to see a lot more choices than they have had before," says Mr. Lee. "The dramatic growth in the number of telecommunications options for SMBs - including new wireless Internet and voice-over-Internet (VoIP) services - is only the beginning. Numerous other services - for example, online storage and backup, collaboration tools, customer-relationship management, sales-force automation - are rolling into the marketplace."

In contrast to the high-visibility dot-com developments that got so much attention in the 1990s, today's under-the-radar SMB transformations are largely sneaking up on the business arena. Drawing on internal studies and on consumer survey-research that the company has commissioned, Hostway has identified a set of early indicators that provide valuable insights into this largely overlooked business transformation.

Among the key findings:

• Two technology-driven developments are turbo-charging the SMB transformations: (1) extensive enhancement of the Internet and hosting infrastructure that serves and empowers small-business Web sites and (2) continuing penetration of broadband and wireless internet, as well as enthusiastic consumer embrace of those capabilities.
• In addition, important shifts in consumer confidence in online commerce are supporting the emergence of a new generation of highly targeted, niche-focused Web-driven SMBs.
• The last 12 months have witnessed a fast-accelerating roll-out and expansion of Web usage by SMBs – and especially among firms in "visual sectors” (e.g., realtors, travel agencies, photography studios, and video production firms) that are rapidly developing new ways to leverage the capabilities of the Web.
• However, despite the convergence of factors that have fueled the widespread growth in SMB Websites and the new generation of online-savvy SMBs, most small enterprises still are not aware of the full range of useful business tools that are becoming available to them via the Web.

In addition to providing more detailed discussion of these and related findings, the new Hostway report also

• Points toward key trends and future developments to monitor as the development of Web-enabled SMBs continues to unfold, and
• Presents profiles of three innovative SMBs that illustrate the Stealth Revolution that is under way.

This report builds on Hostway’s October 2004 Point of view report for Small and Mid-Sized Business, Early Signals and Emerging Trends, which included discussion of:

• Implications stemming from the sharp increase in the number of Web domain registrations in 2004;
• Changing characteristics of SMB Websites;
• Surprising impact that U.S. broadband penetration is having on overseas Web sites, and other international developments;
• Significant barriers that are keeping SMBs from taking full advantage of their Websites;
• New Web services that are poised to leverage the expansion of the Internet, the enhancements in hosting infrastructure, and the major IT investments by SMBs.

“At most small businesses, the owners also wear the CIO hat, and they are will be looking for help in successfully meeting their technology challenges and taking advantage of their Web-enabled opportunities,” says Mr. Lee. “At Hostway, we are developing an array of new services that are at the appropriate scale and that are tied together and packaged in ways that make sense for small enterprises.”