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NEWS FEATURE
ISP + ITS = ASP
Apr 14th 2000: Alliances, joint ventures and acquisitions in recent weeks have turned the spotlight on the convergence of two previously separate service provider industries. Internet service providers (ISPs) are teaming up with providers of information technology services (ITS) so they can play in the application service provider (ASP) marketplace.
In separate articles this week and next week, ASPnews.com looks at the motives and strategies of some of the players involved. - Why providers merge: Agilera and PSiNET explain their motives in Converging forces
- How do independent ASPs plan to survive and thrive in the land of giants? (to be published)
- Where does hosting giant Exodus Communications fit into the ASP equation? (to be published)
So much is at stake in this race to dominate the ASP marketplace, the past month's headline-grabbing investments, partnerships and alignments are just the start of a trend that is set to continue through the end of the year: - IBM Global Services, the world's biggest IT services provider, is to build and operate 28 new Internet data centers for Qwest Communications over the next seven years, in a deal the two companies said will generate as much as $5bn in revenues. See ASPnews.com story Mar 27th, Qwest allies with IBM.
- IBM Apr 4th announced a similar deal with KPNQwest, the European telecoms joint venture between Qwest and Dutch telco KPN, to deliver 18 data centers throughout Europe. The hosting alliance, believed to be the largest of its kind in Europe, is expected to generate more than $4bn in revenues over ten years, split equally between the two companies.
- Leading Internet access and hosting provider PSiNET Mar 22nd bought IT services business Metamor Worldwide for $1.9bn in stock. See ASPnews.com story Mar 22nd, PSiNET aspires to ASP giants.
- Agilera emerged early March as a new ASP venture formed out of the application outsourcing division of leading IT services company Ciber, backed by a $30m investment from top Web hosting company Verio and $15m from Centennial Ventures, Verio's primary venture capital backer. See ASPnews.com story Mar 22nd, Verio-Ciber venture strides out
- Leading ASP Interliant - itself the product of a merger a year ago between its original application hosting business and fast-growing Web hosting company Sage Networks - bolstered its enterprise application skills with the acquisition of two PeopleSoft ITS companies. See ASPnews.com story Mar 22nd, Exchange to get ASP makeover
Report by Patricia Fusco, InternetNews.com
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LINKS
� Agilera
� Ciber
� Exodus
� IBM Global Services
� Interliant
� KPNQwest
� Metamor
� PSiNET
� Qwest
� Verio
Convergence between IT services and Web hosting providers comes as no surprise to those who read the ground-breaking ASPnews.com report, "Packaged Software Rental: The Net's Killer App". In March 1999, the report said:
"Three separate communities of technology-based service providers are racing to bring new generations of electronic services to market. ... All three are on course for collision when they reach their final destiny as e-services providers."
A new, fully updated edition 1.2, published January 2000, is available to order online.
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