News Column

Titans Tune In

May 2005, HISPANIC BUSINESS Magazine

Kevin Brass

Denise Marcilio
Denise Marcilio

As the IT manager for Intermex, a wire transfer company with offices in Miami, Carlos Posso is a popular man these days.

"Every day I get a phone call" from a computer company, he says. From servers to client management solutions, they all want to be his technology provider, part of a new effort to target Hispanic-owned businesses.

Until recently, the big computer companies made little effort to specifically reach Hispanic IT professionals. Few executives in the industry were knowledgeable about Hispanics and even fewer had detailed marketing plans. But today, computer companies are looking to develop new markets as intense competition continues to slice profits in the PC and hardware sectors.

Last year a research project by industry giant Hewlett-Packard (HP) found that the Hispanic IT market is growing three to five times faster than the overall market. Faced with this data, HP initiated a program aimed at recruiting Hispanic-owned business clients, including a staff of 20 bilingual sales reps to focus on Hispanic small and mid-size businesses (SMBs). In March it launched the HP Hispanic Business Center (www.hp.com/go/hispanic) on its Web site, offering training, product information, and support data in Spanish to the U.S. Hispanic market.

Denise Marcilio, general manager of HP's U.S. Hispanic- and women-owned SMB organization, believes the estimates for the growth of the Hispanic IT business market are conservative. Taken as a "vertical market," compared to such sectors as accounting, law firms, and real estate, the revenue generated by Hispanic SMBs could surpass all of the top five verticals combined, HP research concluded. "From a small- and medium-business perspective, we haven't seen anything yet," Ms. Marcilio says.

Overall, the number of U.S. Hispanic-owned SMBs is expected to grow from 2 million in 2005 to 8 million in 2010, according to industry estimates. It's the type of number the computer heavyweights are finding difficult to ignore. "The Hispanic market segment is such a business opportunity that they will have to look at it," says Luis Anavitarte, vice-president and regional director for research company Gartner Dataquest's Latin America group.

Traditionally, computer companies have taken a fairly lackadaisical approach to the market, analysts say. In many companies, U.S. Hispanic SMBs were simply lumped into the overall SMB market, with little or no specific marketing efforts. Other companies concentrated Hispanic marketing efforts on Latin America, according to Mr. Anavitarte. Gartner research finds that the Latin American hardware market is the fastest-growing region in the world. "The companies are much more concerned about how to penetrate the Latin American market, which is becoming more complex," Mr. Anavitarte contends.

He labels the computer industry's current efforts to market to U.S. Hispanics as "insufficient" and says that companies would have to develop more financing and technical support if they want to truly woo this business segment. "There is still not much being done to tackle the Hispanic market in the U.S.," says Mr. Anavitarte.

In general, the computer industry seems uncertain of how to approach the Hispanic community, analysts say. According to Forrester Research analyst and vice-president Andrew Bartels, the computer industry's approach to Hispanic businesses in the past "has been, with few exceptions, one of ignorance." With little knowledge about the market, they have taken few steps to really address their needs. "It's not just software [targeting Hispanic businesses]," he says. "It's about sales collateral and technical support in Spanish."

Strategies on how to approach Hispanic SMBs differ greatly from company to company. While HP is adding Spanish-language materials, IBM is sticking to an English-language approach. Last year Big Blue launched a Web site specifically targeting Hispanic-owned businesses – in English. Research has proven that "if you are a consumer, you may prefer to be spoken to in Spanish, but if you are a Hispanic-owned business, you prefer English," says Judy Smolski, IBM's vice-president of marketing for SMBs.

Like HP, IBM is targeting its marketing efforts at four states with the highest concentrations of Hispanic-owned businesses – California, Florida, New York, and Texas. Those four states will generate more than 80 percent of IT revenues, according to research group HispanTelligence®. "There is a real synergy in the Hispanic business community," Ms. Smolski says. "They like to learn what similar businesses are doing to take advantage of technology."

Trying to attract more SMBs is a top priority for most computer companies. According to Forrester Research, SMBs accounted for 44 percent of all IT spending in 2004, with IT spending by the SMB sector growing at a rate of 8 percent a year, far more than that of larger businesses.

Thanks to competition, it's never been easier for a small company to invest in computer technology. The price of a functional server is now about $400; a commercial-quality laser printer is about $500. A small business doesn't necessarily need a corporate giant to take a technology leap.

"It allows the small and medium business to get into technology products faster," says Chris Ogburn, HP's director of sales and development for SMBs in the Americas. "You can look like a larger business with the adaption of technology."

With margins shrinking for hardware products, more computer companies are looking to boost profits by offering outsourcing services ranging from client management packages to service contracts for local area networks. Of the $145.6 billion projected IT market for U.S. small and mid-size businesses in 2005, 56 percent is expected to come from IT service and support, according to AMI Partners' SMB market forecast. Hispanic-owned businesses are expected to account for a large chunk of that growth. "There was a perception that Hispanics were not big IT adapters," says HP's Ms. Marcilio. "Those people were not seeing the future."



Source: HISPANIC BUSINESS Magazine


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