NEWS	Week's Top News | Alliances | Business/Finance Product Launches | Trends

October 2, 2000

Big money poured into the ASP industry this week. Not merely big sums - that seems to happen pretty much every week, as companies large and small continue to show their conviction that the ASP model is a great investment opportunity. This week, though, was distinctive for the names behind the money.

Telecoms giants Bell South and Cable & Wireless both launched new ASP offerings on a grand scale, backed respectively by Sun Microsystems and Compaq Computer; Ford Motor Company invested in hosted applications vendor Captura; Exodus snapped up hosting business Global Center; and Netscape founder Marc Andreessen's hosting venture Loudcloud filed for what will no doubt be a massive IPO.

Will these big name investors reap their return? Well, there's the rub. When big names throw big money at a big opportunity, there's always a risk that they will miss the mark big time.

Bell South and Cable & Wireless have both been preparing their entries into the application hosting business for a long, long time. For Bell South, this is the second attempt - early last year, when the buzz around ASPs had barely begun to swell, it was bullishly promoting its hosted Lotus Notes and Domino service. But in common with most other telcos' attempts to sparkle in that limited market, the effort was a damp squib.

For Cable & Wireless, it is the first attempt, but one that has taken lengthy preparation. When it first announced the venture in partnership with Compaq last September, services were due to launch in January this year. It has taken a whole lot longer than the partners originally imagined to bring their offering to market. But nevertheless the venture has come a long way, considering that its germination was a conversation between the companies' two CEOs as they watched tennis at the Wimbledon championships last year.

The prior experience and long preparation these two telcos have gone through can only help them in their latest initiatives. Understanding the technology and business issues associated with running an ASP venture takes a huge investment of time and effort - sheer size and money are never enough on their own to guarantee success - and most telcos still have much to learn.

One of the lessons that many players refuse to heed is that, to prosper, it's essential to focus on just one role. Exodus has looked unsure of its role in the hosting sector for some time, and it may now have jumped in the wrong direction with its acquisition of GlobalCenter. The alternative would have been to remain focussed on colocation hosting and make sure it held its position as the world's top provider in that role.

Now that it is acquiring GlobalCenter, it is moving into managed hosting and thus competing with many of its colocation customers, at the same time as losing its differentiation from every other managed hosting company on the planet. The fact that colocation hosting is a commodity market should not have fazed Exodus. It is one of the few companies with the scale to make a success of playing in that market. Now that it has fudged its market positioning it risks becoming a follower in both sectors rather than a leader in one.

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

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