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Whassup With W-ASP Spending?

Spending levels for Wireless Application Service Provider (W-ASP) IT infrastructure are expected to be down 20 percent below levels for 2000 says Cahners In-Stat Group, the high-tech market research firm.

According to its report, 'Wireless Applications Infrastructure: W-ASPs Demand for IT Infrastructure & Services, 2001-2005', In-Stat found that W-ASPs, (application server providers that offer wireless access to hosted applications), were already feeling the heat of the economic downturn in the early part of 2001.

The report says that in order to survive, W-ASPs are now being forced to cut back IT infrastructure spending or risk joining the growing list of failed ASPs.

"This is a tough year for everyone. Unfortunately the problem is exacerbated for W-ASPs because in order to get started they must invest in both their hosting infrastructure and wireless solution prior to selling their services," explains Tracy Corbo, a senior analyst with In-Stat.

She says that the steep ramp up costs can mean a longer Return on Investment (ROI) cycle for investors.

As part of a new report, selected W-ASPs were surveyed on their IT spending plans. In-Stat found that:

  • The largest IT expenses for W-ASPs are hardware and personnel. Hardware and equipment costs including servers, storage, networking and telecom equipment account for 50 percent of the total IT budget. Personnel expenses accounted for about a quarter of the budget.

  • Compaq and Dell are the most prevalent vendors for Windows-based server platforms.

  • Sales Force Automation (SFA) and finance are the most popular hosted wireless applications.

The report provides an overview of the W-ASP market and includes a 5-year forecast of W-ASP IT infrastructure expenditures.