Don't miss the ASP revolution

With broadband and ever-increasing access speeds, the focus now is on leveraging the Internet as a delivery mechanism to provide applications from an online data center to a community of users.

An application service provider (ASP), simply put, is a company that creates a subscription-based software service. These services range from something as basic as backing up data to financial and official applications.

INDIA (ZDNet India) - With a clearly defined revenue model-periodic fees, usually monthly or yearly -- it makes sense to provide software as a service rather than as a "product in a box."

With the advent of the Internet, it becomes easier for companies to pay a certain fee in exchange for always having the use of the latest/greatest software technologies at a click. Why would you want to buy expensive software when you can simply rent it? But since the gamut of software and services being developed worldwide is enormous -- and there exist so many different models and concepts of how people will use their computers, there is no clear definition of an ASP yet.

With broadband and ever-increasing access speeds, the focus now is on leveraging the Internet as a delivery mechanism to provide applications from an online data center to a community of users. Companies like Satyam, Wipro, Hewlett-Packard, etc have adopted aggressive strategies to tap this nascent market and establish an early mover advantage.

Corporate behemoths like Microsoft, Oracle, SAP, Dell, and Compaq, among others, are also battling it out on the ASP turf, for a market that stands at Rs 100 crore in India and $10 billion by 2003 worldwide. A recent IDC report citing ASP growth is inevitable, suggests that the ASP market in US will grow to $7.8 billion by 2004. However, a Gartner report says that just like dotcoms, 80-90 percent of the ASPs will cease to exist by 2001 for reasons simple: the same rule that applied to dotcoms applies to ASPs too.

With so many players jumping in the market, a breed of specialist ASPs has cropped up. Now the ASP family consists of 'Pure or Enterprise ASPs', 'Specialist ASPs', 'Vertical Market ASPs' and 'Volume Business ASPs'. But acronyms notwithstanding, there are a few glitches in the otherwise smooth ride in the ASP market. The major problems in a smooth transition to the ASP market are:

a) Application Bloat: Whole applications cannot be delivered over the Net, no matter how fast the speeds get.

b) Customer Price Resistance

c) Stasis: Both software vendors and the emerging ASP industry have to overcome that general and debilitating inertia which grips all, apart from specific customer issues with ASP access to software.

Security, in this regard, is a major issue since ASP services involves transmission of critical business information over the Internet. However, with emergence of concepts like server side computing and utility computing, the companies are moving, although slowly, from the "wait-and-watch" attitude to the "do it" mode.

Meanwhile, refer to these links and decide for yourself if an ASP merits all the hype and attention, or whether it deserves more!