TOP 50

September 9, 2001

This month's list of the Top 20 ASPs and infrastructure providers reflects the rise and fall in fortunes within different sectors of the industry. The result is three changes to the lists — the most changes to date in a single month.

NetObjects Falls Hard
The first change is NetObjects, whose rapid demise in the past month caught us off-guard, coming just days after we'd added the Web site-building platform vendor onto our Top 20 Infrastructure Provider list for August. A month ago, NetObjects looked like an up-and-coming company — indeed we still like its technology — and we also took comfort in IBM's 48 percent stake in the company.

ASPnews Top 20 Archive

»  August 2001 Top 20  »  July 2001 Top 20  »  June 2001 Top 20  »  May 2001 Top 20  »  April 2001 Top 20

Further study of NetObjects SEC filings in the light of its Q2 results announced last month shows how misplaced that confidence was. NetObjects was so focussed on its transition to a subscription-based, private-label model that it lost two important distribution deals for its desktop boxed product, one of them with IBM.

Coming on top of investment losses incurred the previous quarter, this blow proved fatal. And even though IBM had three directors on the NetObjects board, they were free to vote in IBM's interests rather than putting NetObjects first.

What is the ASPnews Top 20?

All entries in the Top 20 ASPs and the Top 20 ASP Infrastructure Providers lists are drawn from the ASP Industry Global 200 Directory, as published monthly by ASP News Review, the executive newsletter for the worldwide ASP and Web services industry. The companies are selected based on several factors. Sheer size is just one parameter, which is weighted along with more qualitative assessments, such as respect among peers and talent to innovate within the ASP model as defined by ASPnews (see The ASP Value Chain for a detailed description). For more on the process behind the Top 20 lists, see Global Top 20 — Your Questions Answered.

Aanother interesting aspect of the relationship with Big Blue is that IBM inherits NetObjects' source code in the event of its bankruptcy. It's not known whether or not this happened. Certainly, relations between the two companies appear to have declined to such an extent that the Chapter 11 process seems to be a last-ditch attempt by NetObjects management to keep its intellectual property out of IBM's hands (see "NetObjects Failure Leaves Customers Hanging).

Infrastructure List Welcomes Telco
Replacing NetObjects is Qwest Communications, which becomes the first major telco to be named to the infrastructure list. Although Qwest itself has not been immune to the recent economic downturn, announcing layoffs and cutbacks this week, it has always shown commitment and leadership in the ASP industry. It signed a strategic alliance with Microsoft to develop application hosting as early as December 1998 (see MS Shilling Funds Qwest App Hosting) and, of course, is the parent of Top 20 ASP Qwest Cyber.Solutions.

In the past month, Qwest has grabbed headlines with two quarter-million dollar deals, one with GE Medical to deliver data and images to hospitals using the ASP model (see Qwest, GE Bring ASP Model to Hospitals), the other to host and market services from Loudcloud (see Loudcloud Soars on Qwest Deal).

The Venerable One
One of the oldest names in the business joins the ASP Top 20 list this month. Telecomputing was the first company to start using the term ASP to describe itself, way back in 1997.

A restructuring late last year kept the company out of the Top 20 list when first published in April. Since then, it has made significant progress in marketing its application hosting expertise as a private-label service for telcos, ISPs and ISVs. Meanwhile, the original Norwegian business, which has several hundred customers, achieved breakeven in June. Its performance and industry standing has allowed it to overtake Netherlands-based ASP Siennax, which it replaces in the list.

Watching the Digital River Flow
The other new entrant is Digital River, which provides ecommerce services to enterprise Web sites. One of the most successful of ASPs, Digital River has 8,000 customers, strong revenues, cash in the bank and expects to break even later this year — this is definitely a company to keep an eye on, with a declared strategy of enhancing its growth through acquisition.

Digital River replaces StorageNetworks, which has shifted its business to more of a professional services profile in reaction to low market takeup of pay-as-you-go storage utility services.

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