ASPs Focus on Public Offerings and Private Labels

Could we actually be getting back to business-as-usual again? Not in the sense of a return to the overblown and reckless optimism of 1999 and early 2000, but at least back to a climate where effort and innovation can earn a fair return, and successful businesses are fairly valued.

ASPs and IPOs
One straw in the wind is that IPOs have started again. Ten days ago, Lawson Software made its Nasdaq debut (see IPO For Lawson Software), while PayPal's appears to be imminent (see PayPal Seeks $63 Million in IPO).

Lawson's went off very comfortably, which is what you'd expect from a company that's been in business more than 25 years and has a solid record of profitability. Nor did its involvement in the ASP sector seem to do it any harm in investors' eyes. The offering raised $196 million — watch for the company to start making acquisitions in coming months.

PayPal's will be more of a test of market sentiment. The company has solid revenues, but its business is entirely dependent on handling payments for Web-based e-commerce (most of it through auction sites), and it has not yet reached profitability. Nonetheless, the fact that it is even considering a public stock offering suggests that the climate is improving. That's important, because the lack of IPOs has been one of the primary reasons why venture investors have become more reluctant to put money into good companies in the past year. They won't put money in unless they know how they're going to be able to get it back further down the road.

Another sign of a less frosty funding climate was last week's news that New York-based messaging ASP Mi8 has closed a $5 million round (see Messaging ASP Mi8 Raises $5 Million). Mi8 is just the sort of solid, well-run company that in a sensible economy investors should be be eager to fund. But as an ASP delivering Microsoft Exchange services to small and mid-sized businesses, it's exactly the kind of investment prospect that investors have been irrationally shunning for most of the past year. Its funding win is a sign of that tide starting to turn at last.

Private Label Gains Ground
After the experimentation of the past couple of years, those ASPs that are left standing seem now to be settling into successful grooves — even those that have suffered their fair share of pain. Take Interliant, for example, which last week completed its debt restructuring having spent the year divesting several elements of its business. It is now building a strong business providing hosted messaging and Web hosting to enterprises, along with private-label hosting services for companies that want to offer Web hosting and online applications to their own small business customers.

Another company that's always been in the private-label services business is DigitalWork, which last week acquired I-Works, a hosted small business Web site platform vendor (see DigitalWork Acquires I-Works). The new acquisition adds a private-label Web hosting option alongside DigitalWork's core portfolio of integrated online small business services.

DigitalWork was the first company to begin aggregating third-party Web services into an integrated portal that its clients then private-label for onward delivery to their own small business customers. It's been quietly getting on with the job since 1998 and boasts a customer base that includes AOL, AT&T, Amex, Bank of America, Bloomberg, IBM, Compaq and Dell.

A more recent adopter of private-label and cobranding has been Jamcracker, whose decision to work with partners to deliver its hosted service aggregation platform into the enterprise market has been an unexpected success. Last week it recruited Unisys, which joins Accenture and Canadian telco Telus as the third adopter of the platform (see Unisys Partners With Jamcracker). The Jamcracker Enterprise solution adapts Jamcracker's original ASP aggregation technology to solve the emerging need among enterprises to integrate multiple online applications and Web services into their businesses.

ASP Service Takes Off
Finally, news emerged this month that one of the oldest ASPs of all has added a new service. Sabre, the company set up by airlines to provide a shared global ticketing service to the travel industry back in the 1970s, has announced a new ASP offering for smaller airlines. Various software solutions, such as crew management, fare pricing and flight scheduling tools, which until now Sabre has sold to airlines for installation, are now available on an ASP basis.

Despite all the pain of the past 18 months, it seems there's still plenty of life left in the ASP model, so long as you look in the right places.

This review of the week's news highlights is by ASPnews.com founder and consulting analyst Phil Wainewright. A comprehensive news digest is published every month in the ASP News Review newsletter, available exclusively to subscribers.

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