Microsoft Study Reveals Small and Midsize Businesses Using Hosted Services Have Better Financial Performance

Research suggests correlation between IT usage and business growth.

REDMOND, Washington, February 3 - Microsoft Corp today released its global SMB IT and Hosted IT Index
2010,(1) which investigates how small and midsize businesses (SMBs) across
multiple segments fared during the recession and how they use technology. The
research finds that businesses that value IT as an enabler for better
business productivity and effectiveness and those that use hosted services
performed better fiscally than those that do not.

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IT Critical to Revenue Growth

Despite the global recession, more SMBs surveyed in 2010 reported an
increase in revenue than in 2008. Those that reported growth view IT as
critical to their business success.

    - In the past 12 months, 52 percent of SMBs reported an increase in
      revenue, up from 39 percent in 2008.(2)
    - Increasing 20 points since 2008, 55 percent of SMBs view IT as critical
      to their business.
    - Of the SMBs that view IT as critical, 60 percent saw revenues grow over
      the past 12 months. In contrast, among SMBs that stated IT is not
      important, less than 29 percent saw revenue increase.(3)

SMBs Moving Towards Cloud Computing

The 2010 index indicates SMBs are beginning to see the benefits of cloud
computing; more than 40 percent of the respondents that use hosted or cloud
technology reported revenue rises of 30 percent or more compared with 90
percent of respondents not using hosted technology that saw decreases in
revenue. The advantages of hosted or cloud technology are viewed as reduced
cost and IT management and maintenance, as well as increased business value,
productivity and competitiveness.

    - Awareness of hosted services is increasing with 65 percent of SMBs
      using hosted software to some extent, while 73 percent of the
      remainder have considered it, compared with only 44 percent in the 2008
      Index.
    - SMBs are beginning to understand the value of "renting" IT as a
      service - 36 percent said a pay-as-you-go model would be attractive.

Cloud computing has become a watchword for the IT industry as software
and services such as e-mail, websites and e-commerce are increasingly
available in an on-premises, off-premises or hybrid model depending on
business need.

"Over the last five years, we have seen nearly 40 percent growth in usage
of hosted services," said Michael Korbacher, director of EMEA Software plus
Services in the Communications Sector at Microsoft. "Using pay-as-you-go
cloud technologies, small and midsize businesses can now afford and easily
have access to enterprise-class, secure services across any platform."

Correlating Business Performance With Technology Usage

The findings from the research were concluded by analyst firm Freeform
Dynamics Ltd, which independently assessed the SMB IT and Hosted IT Index
2010 to ascertain to what degree IT adoption is driving revenue growth
specifically within the SMB community.

The SMB IT and Hosted IT Index 2010 commissioned by Microsoft researched
3,193 SMBs in a cross section of private industries in 15 countries. Overall,
the findings show greater awareness of the benefits of IT among SMBs and a
high reliance on IT across all industries and geographies. The findings
indicate a clear path towards better financial performance than for those not
currently taking advantage of IT advances such as hosted services.

"Our assessment of the report tells us that an increased focus on IT
correlates with good performance in all of the size categories surveyed,"
said Dale Vile, research director of Freeform Dynamics. "This whole picture
corroborates the notion that technology and hosted services can provide
tangible business advantage, even for smaller companies, and it's not
surprising to see that investment in IT and hosting goes hand in hand with
good financial performance."

Note to editors

(1) 3,193 SMBs surveyed in France, Germany, Netherlands, Norway, Poland,
South Africa, Spain, UK, USA, Australia, China, India, Japan, South Korea and
Singapore in a cross-section of different industries. Microsoft Small
Business Technology Index 2010 available on request.

(2) Microsoft Small Business Technology Index 2008. Available on request.

(3)Table showing correlation between the role of IT within businesses and
revenue change

Role of IT within business and revenue change:

    It's critical to our business; we cannot work without it

      - 14.38 percent - Revenue up more than 30 percent
      - 34.01 percent - Revenue up 10 to 30 percent
      - 11.56 percent - Revenue up less than 10 percent
      - 25.49 percent - No change in revenue
      - 14.55 percent - Decrease in revenue

    It's very important for the majority of our activities

      - 8.86 percent - Revenue up more than 30 percent
      - 28.32 percent - Revenue up 10 to 30 percent
      - 8.65 percent - Revenue up less than 10 percent
      - 40.16 percent - No change in revenue
      - 14.01 percent - Decrease in revenue

    It's important, but not essential to the running of the business

      - 8.21 percent - Revenue up more than 30 percent
      - 18.48 percent - Revenue up 10 to 30 percent
      - 8.21 percent - Revenue up less than 10 percent
      - 46.33 percent - No change in revenue
      - 18.77 percent - Decrease in revenue

    It complements our business but is by no means essential

      - 7.41 percent - Revenue up more than 30 percent
      - 13.89 percent - Revenue up 10 to 30 percent
      - 7.41 percent - Revenue up less than 10 percent
      - 42.59 percent - No change in revenue
      - 28.70 percent - Decrease in revenue

The IT services outlined in the research are as follows:

    E-mail:

      - 67 percent SMBs have on site
      - 29 percent SMBs have hosted
      - 4 percent SMBs don't have

    File sharing/collaboration

      - 56 percent SMBs have on site
      - 23 percent SMBs have hosted
      - 21 percent SMBs don't have

    Backup:

      - 71 percent SMBs have on site
      - 22 percent SMBs have hosted
      - 7 percent SMBs don't have

    CRM

      - 52 percent SMBs have on site
      - 31 percent SMBs have hosted
      - 17 percent SMBs don't have

    Webconferencing

      - 40 percent SMBs have on site
      - 39 percent SMBs have hosted
      - 21 percent SMBs don't have

    Website

      - 49 percent SMBs have on site
      - 39 percent SMBs have hosted
      - 12 percent SMBs don't have

    Server

      - 59 percent SMBs have on site
      - 28 percent SMBs have hosted
      - 13 percent SMBs don't have

    E-commerce

      - 46 percent SMBs have on site
      - 33 percent SMBs have hosted
      - 21 percent SMBs don't have

About the research

The Microsoft Small Business Technology Index 2010 research report was
executed by Vanson Bourne (www.vansonbourne.com) between November 2009
and January 2010. The research questioned 3,193 small and midsize businesses
(up to 500 employees) across 15 countries worldwide: Australia, China,
France, Germany, India, Japan, the Netherlands, Norway, Poland, Singapore,
South Africa, South Korea, Spain, the UK and the US. A copy of the full
research report is available through mscsemea@webershandwick.com.

About Microsoft

Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in
software, services and solutions that help people and businesses realise
their full potential.

About Microsoft EMEA (Europe, Middle East and Africa)

Microsoft has operated in EMEA since 1982. In the region Microsoft
employs more than 16,000 people in over 64 subsidiaries, delivering products
and services in more than 139 countries and territories.

This material is for informational purposes only. Microsoft Corp
disclaims all warranties and conditions with regard to use of the material
for other purposes. Microsoft Corp shall not, at any time, be liable for any
special, direct, indirect or consequential damages, whether in an action of
contract, negligence or other action arising out of or in connection with the
use or performance of the material. Nothing herein should be construed as
constituting any kind of warranty.

Chris Gibbs of Weber Shandwick, +44-207-067-0528, cgibbs at webershandwick.com, for Microsoft / NOTE TO EDITORS: If you are interested in viewing additional information on Microsoft in EMEA, please visit www.microsoft.com/emea or the EMEA Press Centre at www.microsoft.com/emea/presscentre. Web links, telephone numbers and titles were correct at the time of publication, but may since have changed. For additional assistance, journalists and analysts may contact the appropriate contacts listed at www.microsoft.com/emea/presscentre/contactus.mspx. If you are interested in viewing additional information on Microsoft Corp, please visit the Microsoft News Center at www.microsoft.com/presspass on Microsoft's corporate information pages.