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

November 20, 2000

The most striking ASP announcement at Comdex in Las Vegas this week was the revelation by PC utility ASP McAfee.com that it expects to reach profitability in the second quarter next year, a full year ahead of the timeline it promised at the time of its IPO in Dec 1999.

Network Associates spinoff McAfee.com ranks as the world's most successful ASP by user numbers of paying users, with over 650,000 subscribers in 230 countries worldwide (that's just seven short of a possible 237 countries in the entire world, CEO Srivats Sampath proudly pointed out to delegates in his keynote speech at the ASP Summit show during Comdex).

McAfee.com charges a $29.95 annual fee for anti-virus protection that's automatically updated to a user's desktop, laptop or handheld across the Internet. It also offers a remotely-managed personal firewall, and last week introduced a new set of services for business users. See related ASP News story on internetnews.com, McAfee.com's .NET Initiative, Nov 10th 2000.

The secret of McAfee's success? "We built it and they came," CTO Doug Cavit told ASPnews this week. The advancing breakeven horizon was achieved without the painful staffcuts and restructuring experienced by many enterprise ASPs, still striving to prove the ASP model for delivering third-party branded software. See related ASPnews.com story, ASPs Shed Staff As Cost Pressures Bite, Oct 9th 2000.

Sustainable models

The picture seems altogether rosier among Internet-based ASPs like McAfee that deliver their own software on a subscription basis than it does among the classic enterprise ASPs. A similar success story is sales force automation ASP salesforce.com, which has signed up 20,000 trials and 1,200 paying customers in the eight months since its launch.

Not every Internet-based SFA provider has been so successful — CRM vendors Interact Commerce Corp and Siebel Systems have both retrenched Internet application portal plays in the past month, as we reported this week — see Mixed Fortunes For Customer Relationship ASPs, Nov 16th 2000.

But neither Interact nor Siebel had a clear plan to reach profitability through building up subscription revenues for their services. Both were dot-com plays that were successfully building up visitor traffic, but discovered their business plans were unsustainable as soon as dot-com funding began to dry up.

There are two clear morals for those looking for the secret of profitability as an ASP. Number one, do a good job of delivering software across the Internet that works well and meets a clear market need. Number two, build your business around predictable revenues earnt in return for delivering that service to customers. Oh, there's a number three as well — read ASPnews if you want to know what's really going on. We singled out McAfee and Salesforce as successful ASPs back in July — see page two of Now Everyone Has to Cross the Chasm, Oct 9th 2000.

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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