CAP Ventures looks into device usage in home offices

Office World News, Jan 1998 by Flynn, Bill

Market size and potential There are 29.5 million businessrelated SOHO locations (defined as up to 9 employees) currently in the U.S.- made up of 4.0 million small businesses and 25.5 million home office locations. Small business SOHO sites, which are operated at a business location, are further segmented by two employee size breaks: 1- 4 employees (3 million sites) and 5-9 employees (1 million sites). The small business SOHO segment is expected to continue to grow about 3% over the next several years to reach a projected 4.6 million U.S. sites by 2001. Home-based SOHO sites include income-generating home businesses (18 million sites) and work-related home offices (7.5 million sites; includes telecommuters and remote offices). The home SOHO segment, the fastest-growing segment of the U.S. economy, is conservatively expected to grow at a 10% annual rate through the end of the century-or reach almost 43.2 million by 2001. As seen in Figure 1, the total U.S. SOHO market is expected to grow from almost 29.5 million sites in 1996 to more than 47.8 million site in 2001.

While the total universe of SOHO sites represents the market's ultimate potential, there are some important base parameters which CAP Ventures believes best determine the realistic IT (Information Technology) buying potential of this segment. Chief among these is the current penetration rates of SOHO sites with at least one PC and one printer. While 75% of firms with 5-9 workers currently have at least one PC and at least one printer, only 55% of small businesses with 1-4 employees do. Overall, 53% of home businesses and 60% of home offices (telecommuters/remote office) currently use at least one PC and one printer (see Figure 2). Though penetration rates have slowed, CAP Ventures does expect all SOHO sites to increase their adoption of computing equipment in the foreseeable future.

The general corporate movement towards any-source/any-output printing is also having an impact on the SOHO environment. Many SOHO locations now have the ability to access, create, edit, manipulate, and output documents that contain high-quality text and graphics-including full-color images. PCs, the Internet, CD-ROMs, and scanners are chief among the sources already providing the sources. SOHO output applications span the gamut of document types including general office documents (e.g., word processing, spreadsheet, financial), presentations, proposals, sales support materials (brochures, flyers), webbased documents (HTML), newsletters and reports. The broad choice of output devices allow these electronic images to be rendered in hardcopy in increasingly higher quality-often in full color. These applications will fuel demand, not only for digital peripherals, but for premium quality media and supplies to provide better image quality output. SOHO host platforms

The SOHO installed base of computers is aging and ripe for upgrades. More than 44% of all SOHO sites indicated they had purchased their last PC more than 2 years ago. The predominant CPU platform used among SOHO locations (56%) is Intel 386 or 486 systems or equivalents. The older systems were most used among small businesses (66%) and least among home businesses (53%). Only 10% of all SOHO locations reported using newer Pentium Pro or 686-based systems. Small businesses have few Pentium Pros (4.8%), while home businesses are the strongest adopters of these advanced PCs with nearly 14% reporting a Pentium Pro. Overall, 33% of SOHO sites use Pentiumbased machines and almost 13% use Apple Macintosh systems (see Figure 3).

Despite the older hardware, SOHO sites appear to be keeping up with operating systems (OS) and application software. Microsoft Windows 95 ranked as the predominant OS-used at more than 45% of all SOHO sites. Windows 3.1 (or earlier) was reported at 26% of the sites, DOS at 14%, and Macintosh/Apple at 10%. The leading application software is word processing, used by almost 94% of all SOHO sites. Primary word processing packages cited by users included Microsoft Word (including Office versions) leading at 56%, followed by Wordperfect with 27% share. Spreadsheet and financial software-both reported at about 58%-tied for second place. Microsoft Excel-found at 36% of the locations, and Lotus 123with 14.5% penetration-topped the spreadsheet packages. Quicken at 26.5%, and QuickBooks at 15.4% led financial packages. Database, desktop publishing, and presentation graphics software make up the bulk of the remainder. (See Figure 4).

The average number of desktop PCs among the overall SOHO respondent base was 1.71 (61% of sites have 1 PC; 22% have 2; 9% have 3; and 8% have 4 ) Portable PC usage was highest among the small business segment (22% of locations), followed by home offices (17%), and home businesses (15%).

Imaging peripherals

One of the primary objectives of the CAP Study was to assess the current penetration rates of (and sales opportunities for) imaging peripherals for SOHO sites. Not surprisingly, standalone fax machines, copiers, and printers are the most common imaging peripherals installed at SOHO locations (See Figure 5).