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Qi dies as ASP model feels the pinch

Qi dies as ASP model feels the pinch

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Quantum Internet (Qi), one of the last surviving pure-play application service providers in Australia, has been placed in voluntary administration and is likely to have its assets sold off.

Qi, like so many of its ASP peers, was a business built on an IT vision that never became a reality. There was a time in the not-too-distant past where any sceptics of the ASP model were shouted down. The model's evangelists were certain that a one-to-many approach was not only technically and economically feasible, but also in demand among Australia's legions of small businesses.

Qi had been the spending habit of ASX-listed investment group Sun Capital for many years. The demise of Qi has hit the investment company hard -- Sun Capital's share price has dropped significantly in the last six months, from 12 cents a share to its current trading price of 5 cents.

Wayne Kernigan, Sun Capital's chief financial officer, said most of the $8 million that the company reported as an accumulated loss at the end of the last financial year was attributed to providing for its investments in IT companies such as Qi. "We spent a lot of time and effort getting them there," he said.

As late as November last year, the investment group was still placing its bets with the ASP model, contributing an additional $1.85 million into Qi, confident of its future during one of the IT industry's darkest periods. This confidence may have been due to the fact that the man who was CEO of Qi until very recently, Stephen Moss, was also a director of Sun Capital.

Sun Capital is a secured creditor of Qi and claims it is owed $850,000, which it expects to be recoverable should all or part of the business be sold by the administrator.

For now, Freddie Grew, Qi's commercial director, said the business is operating as normal under administration, and is confident of a positive outcome from the administration process.

Qi was a founding member of the local branch of the ASP Industry Consortium - an industry organisation that promoted the virtues of the ASP model to the wider community. The two founders of the Australian branch, Qi's Colin Lim and Peakhour's Michael Ellies were once the most vocal evangelists for the ASP model in Australia, but have both resigned their posts in the last 12 months. Lim now works for hosting provider Hostworks and Ellies for a marketing/advertising firm.

Peakhour got out of providing ASP services some time ago, choosing to wholesale its technology to large businesses instead.

A look at the other members of the sunken consortium paints a clear picture of what happened to the ASP industry in the last 12-18 months. Many players, such as Solution 6 and Peakhour, divested their direct ASP services altogether. Pureplay ASPs such as Qi and Cavillon went out of business. Hostworks acquired Interpath. Tequinox was brought back into the Mincom fold and like the ASP business at Unisys, was re-branded as a "managed services" division.

Expressapps, Applicationstation and Citec are Application Service Providers are among the few ASPs keeping their heads above water.

For the full report on the demise of ASPs read this weeks ARN (June 5), out now.


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