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Economic Impact of Open Source on Small Business: A Case Study by Mike Hendrickson, Tim O'Reilly, Roger Magoulas

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Chapter 5. Economic Impact of Open Source for SMBs

Constant downward cost pressures during the last 15 years from open source projects has made having a web presence affordable, and the business opportunities that a web presence provides are now more reachable for more if not all SMBs, including the growing home-based business (HBB) segment.

For SMBs, a web/online presence pays off immensely. According to a 2011 McKinsey study, SMBs that invest most heavily in web technologies were shown to grow fastest, more than twice as fast as companies who make the lowest level of investments. [9] McKinsey found that the increased productivity of the SMB market in mature economies had a significant impact on overall GNP growth in those countries.

In this section, we’ll look at some of the factors leading to this pay off. We’ll estimate the total revenues of the businesses hosted on Bluehost, and by extension, by the entire hosting market. We’ll also show a methodology for determining the cost savings to business from the open source platform, and will explore one way that having a web presence makes such a significant difference to small businesses.

Economic Activity Attributable to Hosting Industry Customers

According to the customer survey described in Chapter 2, 71% of customers are using their site for business purposes, including non-profits. Customers reported that their businesses ranged in size from under $10,000 in annual revenue (clearly a home-based or supplementary income business) ...

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