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Aberdeen: ASPs Still Going Strong

Worldwide ASP spending is expected to increase from $3 billion in 2001 to roughly $16.1 billion by 2005, based on the latest study by Aberdeen Group.

"Growth in the ASP industry will remain robust through 2005," said David Wright, vice president of Aberdeen's Private Equity Services Division. "Our data clearly shows that, both domestically and internationally, many ASPs are gaining sales traction via strong ROI sales messages."

Despite customer acquisition challenges that many application service providers (ASPs) have endured over the last six months, market growth remains healthy. In fact, ASP revenues are forecasted to increase at a compound annual growth rate (CAGR) of 52.2 percent over the next five years. Total ASP market size is expected to increase from $3 billion in 2001 to roughly $16.1 billion by 2005, according to Aberdeen Group.

The report, Worldwide ASP Spending Forecast and Analysis 2001-2005, chronicles the expected spending in 157 countries for ASP market segments including: Enterprise Research Planning (ERP), Human Resources, Financial and Accounting, Education and Training, Customer Relationship Management (CRM), e-Commerce, Communications, and Collaboration.

Aberdeen's forecasts indicate that the United States will remain the largest market for ASP services through 2005. Nevertheless, Aberdeen research indicated that Western Europe represents an emerging opportunity with regional spending topping $4 billion by 2005. Much of the opportunity in Western Europe will be driven by Germany whose aggressive adoption of the ASP model will support a $950 million dollar market by 2005.

"Despite the recent hype hangover suffered by the ASP industry, Aberdeen remains confident in the industry's long term value proposition. Indeed, with IT departments experiencing serious capital constraint, the ASP value proposition has never been more alluring," said Lew Hollerbach, managing director, Service Providers Communications Infrastructure & Services at Aberdeen.