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INT Media Forecasts For ASPs in 2002

In its latest report, INT Media Research, a division of INT Media Group, Inc. yesterday announced its key findings for the application service provider (ASP) industry.

The report titled: '2002 ASP Industry Insight: The Rise of the Provider Web' offers an insight into what direction successful ASPs will take in 2002 and report that there will be a continuing evolution of the ASP industry in coming years.

According to Dan Muse, managing editor of ASPnews.com and co-author of the report, "While the ASP market has suffered its share of bad news over the last year or so, we believe that the model is stronger than ever.

He says the report aimed to do three things: Look at the history of the ASP industry; survey ASPs and related companies for a snapshot of the present; and offer a clear vision of where the market for hosted applications is headed.

To determine the state of the current market, visitors to ASPnews.com, who were employed in the ASP industry, were invited to take part in a survey.

The survey defined the term ASP: 'An ASP is any company that delivers and manages applications and computer services to subscribers/clients remotely through the Internet or over a private network.' as stipulated by the ASP Industry Consortium (ASPIC) and Information Technology Association of America (ITAA).

Some of the key finding of the survey follow:

  • While the U.S. accounted for the highest percentage of ASP and related-industries companies, nearly as many are based in Europe. ASPs also have a strong presence in other parts of the world.

  • In one of the more interesting findings, many respondents clearly don't practice the outsourcing philosophy they preach. A large percentage say they don't even outsource their data center. Few outsource -- or perhaps more importantly, plan to oursource -- application infrastructure tasks such as billing and provisioning to providers that specialize in those areas.

  • Sun makes a strong showing as a server platform of choice. Interesting, though, is the strong support of .Net servers.

  • For platform choice, respondents settled into two, relatively evenly divided camps -- Mircosoft and anything but Microsoft.

  • For applications delivered via the ASP model, Microsoft rules. But Oracle and SAP make strong , but distant showings.

  • Most ASPs report relatively small earnings figures, while a significant minority claims much larger earnings.

The report analyzes the behavior and trends of the ASP industry over the past few years, finding that ASPs have experienced a rapid rise and a sudden shakeout, and are now regrouping amid fear and hesitation from the investor community and industry watchers.

However, the report concludes that the model for ASP success makes as much sense now as it did in 1998 and that industry player must take the right steps in the coming year to benefit from delivering software as a service.

Muse explains that the ASP market is working through what he calls an "awkward adolescence" and says the market had become more layered since the term meant ASP Web-enabling and selling someone else's software.

"Today, the relationships between ASPs, application infrastructure providers, Independent Software Vendors (ISVs), hosting service providers and so on are more complex," he says.

But Muse concludes that the industry is moving towards maturity, and while some fine-tuning is still called for, the ASP model has never looked stronger.