This year will be a turning point for application service providers as they rethink their business models and battle to be among the survivors in the fast-growing market, market research firm IDC says in a newly released report.
"We're at the point where ASPs really need to differentiate themselves by offering additional types of services," says Amy Mizoras, senior research analyst for IDC's Application Service Provider Program. She says ASPs likely will focus on customer service or include add-on features such as storage or security components to help them rise above the competition.
In its report, IDC says enterprises this year also can expect a slew of ASPs that will design software specifically for the Web, rather than retooling packaged software for hosted delivery.
Overall, IDC agrees with other analysts who expect a big shakeout in 2001 as the hype around the ASP model dissipates and companies get down to business.
"Without a doubt, ASPs are in for an interesting ride in 2001. For some, the worst is just around the corner as they fail to successfully execute the model. However, it will be a billion-dollar market in 2001, and for ASPs that understand the market and play wisely, the best is yet to come," said Jessica Goepfert, a senior research analyst with IDC's Program.