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A fast-growing number of small and medium-sized firms are deeply concerned about being hooked on Microsoft technology and depending too heavily on the software giant's products and services.

That's according to new research from the Yankee Group which finds that more than 40 per cent of companies with between two and 499 employees were conscious of the fact that they had all their software eggs in the Redmond basket.

"While we expected some apprehension about over-dependence on Microsoft, we were surprised at the extent of this concern throughout the SMB (small and medium-sized business market)," said Michael Lauricella, program manager for the Yankee Group's Small and Medium Business Strategies advisory service.

According to the analyst firm's SMB (Infrastructure Survey, almost three quarters of the same group of survey respondents said that they were considering going cold turkey by "actively seeking other vendors to diversify their portfolios".

However, John Coulthard, head of small business at Microsoft UK, dismissed the poll, stating that smaller firms were the least likely candidates for diversification of technology portfolios.

"We're not talking stocks and shares here with diversification of portfolios, but the ability of firms to manage their IT infrastructures," Coulthard told The Register .

"Savvy small business owners really do not want to say that if they have five servers they want to diversify so that one is Microsoft, one is Apple, one is Unix and the others are something else."

Coulthard denied that any companies are overly beholden to Microsoft, claiming that only a very small percentage of the overall cost of a typical business PC will swell Redmond's coffers.

"In what terms are all these firms totally dependent on Microsoft? Their hardware may be from Dell or HP - that's 70 or 80 per cent of the cost. Microsoft will then provide the OS and the productivity suite. Maybe Symantec will provide the AV - that's as much cost as the operating system."

According to Helen Chan, Yankee's small and medium business strategies senior analyst, Microsoft is banking on the SMB market being the "next big thing" for the company, worth an estimated cool $10 billion by 2010.

But she notes that Microsoft is facing stiff competition in the sector as vendors such as SAP, Oracle, Siebel and IBM are moving down-market: "There's no question that Microsoft commands a strong presence in the SMB market, but this fear of Microsoft over-dependency will certainly open up opportunities for competitive vendors eager to sneak in." ®

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