Microsoft Gives ASPs A Much-Needed Boost

If you're following the hype of the application service provider (ASP) trend, you've probably wondered if your next software upgrade will entail moving your key applications off your PC or internal server and onto a third-party server across town or across the country.

The concept is appealing. Let someone else—an expert—deal with hardware and software support, maintenance, upgrades, and general IT management. You just pay one monthly fee—a low one, you hope—and go about your real business, relying on the Internet to provide the connectivity you need to your critical apps. The ASP trend is the hottest development in business computing today. The only part that's been missing has been the participation of the leading applications provider, Microsoft. Now that component is falling into place, too.

It's possible to host Office and other Microsoft applications by using Citrix technology, but that's not the same as deploying apps actually designed for Web hosting. Coming to the market a bit late, Microsoft is trying to make up time with its recent announcement that it will enter the ASP business directly, hosting applications for customers and working with third-party ASPs to develop their hosting services.

While the trend is clear, there's a lot of progress that has to be made before your average business can consider Web-hosted apps a clear and reasonable alternative. On the positive side, Office 2000 "today has lots of optimization to allow Web hosting" says Joseph Krawczak, Microsoft's director of marketing for desktop applications. On the to-be-added side of the balance sheet is the fact that current licensing options for Office 2000 don't include renting the apps. Microsoft is working on new licensing options to cover that, he says.

A potentially more serious stumbling block, according to Krawczak, is that "the cost of the service is going to be quite high." Microsoft doesn't plan to raise the current price of the Office 2000 suite for those who obtain it via an ASP; the increased costs will be for the ASP service itself. Building and managing IT hardware, software, and networking resources are expensive. All those provider costs will be passed on to customers.

Even with high costs projected for ASP services, there are some organizations that will eagerly examine that option: Small businesses with limited IT capabilities, companies with highly mobile workforces, and universities and training operations with multiple users per PC, to name just a few. For them, the key concern won't be cost; it will be efficiency and reliability. What they really want to know: Does it work?

Microsoft and its ASP partners are trying to answer that question. From the demos we saw at Microsoft when we visited Redmond recently, we can say that it does work—at least on a very limited basis. We saw fully functional Office 2000 apps and Internet Explorer 5.0 running on Windows 98 PCs via a 26.4-Kbps dial-up connection across the Internet. And we saw them running on a Windows CE device connected at 21 Kbps. They weren't fast, but they ran. Of course, you'd want to have access to a network connection if you want to pursue an ASP option for anything other than part-time, on-the-road work.

Microsoft's entry into the ASP market should give the category a big boost, but we're still a long way from having the ASP model as an everyday option.