ASPs: Is it all Bells and whistles?

ASPs: Is it all Bells and whistles?


Among the hype and hoopla surrounding the application service provider (ASP) market, analyst International Data Corp (IDC) is finalising a report into the current state of play for the Asia-Pacific region.

IDC predicts that although the market will show a strong compound annual growth rate of around 87 per cent, expected revenues don't justify the current industry fervour surrounding the new business model.

Asia-Pacific revenues are only likely to capitalise around $185 million by 2004, according to the latest figures, and Merv Langby, chief analyst services for IDC, said the interest generated by ASPs is largely unwarranted.

"There's been far too much hype. If you're thinking of making a lot of money in this market, think again," Langby said. "The model is plausible, and our research shows there is strong grounds for support of [ASPs]."

Langby claims that while much of the attention has been focussed on the enterprise space, SMEs with their limited expenditure and typically resource-starved infrastructure provides a "better fit" for the ASP model.

Its early days yet for the Australian market but Langby believes ASPs will be a market reality that will start ramping up over the next 9-12 months. "But we're still a long way shy of critical mass," he said.

Langby points out a number of market inhibitors which are taking its toll on ASP adoption within the region, including a lack of customer awareness and mindset towards renting software delivery, concerns over security and awareness, and applications which are not "ASP-ready".

Another major factor affecting ASP take-up according to Langby is that a large proportion of software vendors are yet to establish pricing structures and licensing agreements geared around applications providers.

According to Langby, no current player has the capability to offer the applications management, infrastructure management and the general services and support to fully accommodate a customer's needs. As a result partnering with other service providers and or vendors is the key for an ASPs success.

"Partner or perish," claims Langby. "No one company is a pure play ASP. They have to round out the other areas themselves or through partnering."

ASP pioneers identified by IDC include Interpath (after acquiring Alta),, Com Tech, EDS (NZ), Unisys (NZ), Peak Hour, Solution 6, Telstra and Tequinox.

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