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Weekly Review: Where Have All The ASPs Gone? By Phil Wainewright November 26, 2001 Although a substantial number of companies remain happy to proudly promote themselves as ASPs, many others have been slinking away from using the term, anxious to avoid the negative anti-hype that currently surrounds it. This ends up creating a skewed public image of the industry: Most failed ASPs are clearly identified as such, while many companies that successfully use the ASP model are careful to avoid being publicly tarnished by using the ASP label. What Do You Think? "Readers frequently write in to follow up points expressed in these columns, and one correspondent last week noted that I'd 'gone slightly from humor to sarcasm on the issue of Microsoft.'" Is Phil too tough on Microsoft? Offer your opinion at the ASPnews Discussion Forum This is especially ironic at a time when more software vendors than ever are seeking advice on how to add ASP offerings, and more customers than ever are signing up for ASP deployment of their IT. The industry is like an iceberg as the illusionist artist Escher might have drawn it; the one-tenth that you can see is sinking fast, while the nine-tenths that you can't see is comfortably afloat. So Where Have All the ASPs Gone? Whereas ASPs were once pureplay startups, striking out on their own with what was then a new and innovative model, most ASPs today are divisions or business lines of established companies. Application service provision is no longer an industry in its own right. Instead, it's mostly become an accepted part of mainstream IT services. These days, software vendors offer hosted versions of Web-native applications as a matter of course. Managed hosting providers have extended their basic facilities-based offerings to include the management of software and applications infrastructure. Even outsourcing companies finally seem to have got the hang of running Internet data centers and can now offer Web and application server management as a standard offering. A report last week that Web-hosting company Verio is moving into the enterprise market confirmed this trend of convergence among hosting companies, outsourcers and enterprise ASPs. Verio plans to use its relationship with its ASP joint venture Agilera to bolster the resources of its own enterprise hosting division. The two might even merge. Given Verio's traditional identity as a low-end hoster of small business Web sites (despite the apparent clout that it gains from being owned by Japanese telco giant NTT), it could do worse than adopting the Agilera name to spearhead its penetration of the high-end enterprise sector. Continued on Page 2

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