Comdex Exhibitors Court Small Business

The giants of the computer industry recited a new mantra at the Comdex trade show here this week: small business, small business, small business.

Companies large and small set aside much of their precious real estate on the convention floor to demonstrate hundreds of new products tailored to small businesses, ranging from modular networking equipment to simplified accounting software.

The infatuation partly reflects an apprehension among high-tech companies that big corporate markets are approaching saturation.

Some industry leaders said the embrace of small businesses has more to do with finding a new marketing message than finding a new market. After all, small businesses have been buying computers from the very beginning, even without all the recent attention.

But others stressed that the attention to small business is warranted, including IBM Corp. officials who said corporate technology spending has slowed to single-digit growth in recent years, while technology spending by small companies has climbed to 14% annually.

That’s been enough to prompt fundamental changes at many companies that once considered the small-business market too diverse and diffuse to target.

“We used to sell into the small-business market by accident,” said Eric Benhamou, chief executive of 3Com Corp., a Santa Clara-based maker of computer networking products and modems.

That changed last year when 3Com set up a small-business unit for the first time, recruiting thousands of resellers to target the market with new products that help small businesses build their own networks--such as stackable hubs and routers that can be mixed and matched.

IBM has also done an about-face. The company still caters to the giants of corporate America, but is now spending millions of dollars on television commercials targeting small companies. Two months ago, IBM even introduced a service for hosting the Web sites of small companies. It costs $49 a month, small change for a company that built its business selling million-dollar mainframes.

Largely because of the Internet, the economics of computing have changed in favor of small companies, said Bob Dies, head of IBM’s network computing division.

In the 1960s and ‘70s, only corporate giants could afford to build and maintain computer networks. Now many of those same companies are still saddled with aging networks that restrict their ability to shift to newer, faster technologies.

Still, other industry leaders remain skeptical that small business is the frontier it’s being made out to be.

“Small business has for a long time been about a third of the computer market, and that hasn’t really changed,” said Craig Barrett, president of Intel Corp. “A lot of this is just hype.”