www.aspnews.com/analysis/analyst_cols/article.php/723931
By Phil Wainewright March 26, 2001 Flying in the face of continued wariness on Wall St. and elsewhere, several companies renewed their commitment to the ASP market last week.
Whatever the uncertainties in the ASP market, Micron's verdict is clear: It sees better prospects from the merged companies' $160 million hosting business this year than it expected from its now discontinued $1 billion-a-year business as a PC maker, ranked 18th-largest in the world by market analyst Dataquest. Although Micron's HostPro subsidiary launched its hosted Microsoft Exchange offering for small businesses just last month, it was August 1999 when Micron first entered the hosting business with the acquisition of high-end web hosting provider HostPro. In October that year, it announced a $210 million investment to rebrand itself as micronpc.com, marketing pay-as-you-go bundles of hardware, software and services as a provider of "subscription computing." Micron was an early participant in pilots of hosted Exchange last year and is also a longstanding ASP partner of Computer Associates, having signed up last June to offer hosted versions of the software vendor's Masterpiece financials and MK Manufacturing enterprise resource planning (ERP) packages. But although the acquisition of Atlanta, Georgia-based Interland is the latest in a series of hosting company acquisitions since Micron embarked on the strategy back in 1999, this one is different. Interland is already one of the most successful companies at providing hosted websites and e-commerce to the small and medium-size business market, with a sophisticated self-service provisioning and account management system that attracted a $5 million strategic investment from Microsoft in January 2000. Interland was profiled in the December 1999 issue of the ASP News Review industry newsletter, an article now published online for the first time — see Interland Gears Up to Host Apps in Volume. Micron's confidence in Interland's market profile is such that it is to give up its own name — often confused with PC memory manufacturer Micron Technology, with which it has a longstanding relationship — in favor of the Interland brand. The merger is set to create the world's largest business-class hosting company dedicated to serving the small and medium-size business market. With both companies currently listed as "Worth Watching" by ASP News Review Global 200 directory, the merged entity looks certain to enter the top 200 once the deal closes in the summer.
ASP Confidence Prentice was founded as a high-tech consultancy in 1996 with plans to move into application outsourcing. Now it has become the latest ASP to move to a "master-ASP" model, in which it concentrates on developing skills in application and infrastructure management while leaving business integration and on-site implementation to partners. Dissolving its in-house consultancy will remove any threat of sales conflict with its partners and pave the way towards greater scalability of its own business — driven by rapid growth in the market for outsourced applications. (See related ASPnews analysis, Still Stuck on Groundhog Day.) Leading smallbiz financials software vendor Intuit also upped its commitment to the ASP model last week (March 20) with an upgrade to the web-hosted version of its QuickBooks software. The new release adds support for accepting online payments from customers by credit card or direct account transfer. That means small businesses can use a single online system to raise invoices and statements, collect payments and then book the transactions into their accounts as an integrated automated process.
Downgraded for Upgrading Yet perhaps the explanation lies in Intuit's expanding commitment to a web services model, a strategy that seems to give Wall St the jitters whenever it's embraced by a software company. The principle is amply demonstrated by the stock price for Concur Technologies, which has remained pinned beneath the $1 level for most of March, down from a 12-month high of $20. This despite a succession of news announcements this year underlining the breadth of its expanding customer base, and culminating in the announcement Tues (March 20) of a reseller deal struck with prospective Microsoft subsidiary Great Plains Software. Concur began its transition to a subscription-service model back in spring 1999, when the stock price hit a high of $50. Since then, it's been downhill all the way for the stock, and despite significant customer wins, particularly over the past six months, sentiment just hasn't turned the corner. It's not easy for anyone to adopt an ASP strategy in this kind of climate; yet enough people remain stubbornly convinced it's the right thing to do that more and more companies are making that commitment. It is their courage and determination that will continue to drive a rising groundswell of opinion in favor of the model. 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. |