ASP Death Reports Have Been Greatly Exaggerated

Greetings, all:
When I was preparing the News and Views items for this issue of Application Service Provider UPDATE, I came across a story about International Data Corporation's (IDC's) top 10 predictions for 2001. One IDC prediction is that the term application service provider (ASP) will lose popularity because of its association with the dot-com crash. This speculation immediately triggered two questions. First, if IDC's prediction is correct, will we have to change this newsletter's name? Second, why didn't IDC predict that the "e" prefix will lose popularity due to ITS association with the dot-com crash? If I never hear about another e-company or e-concept, I'll die happy. (No offense to any readers who've founded companies called e-something. Although clever at first, the term has become sadly overused. Let's move on to a different letter!)

All kidding aside, I think IDC might have something. The name's lessening popularity doesn't mean that online applications are fundamentally a bad idea, but that they'll become part of larger offerings. I've been hammering this point home in one form or another for a while, so forgive me for making it again. Calling a company an ASP doesn't necessarily tell potential customers anything. Despite the ASP Consortium's best efforts, the term ASP is still only vaguely understood among techies and is almost unknown among the non-techies, who are the best initial market for online applications. Online applications and data storage won't go away, they'll become part of another offering. Losing the ASP term (and that's far from assured: SCO, which just started to offer its ASP-in-a-box solution through channels, is betting that the term will stick around) doesn't mean losing the ASP concept.

First, I expect ASPs that market to small businesses (and consumers, as that market develops) to partner with ISPs. The customers won't know or care that their applications come from an ASP—all they'll know is that their ISPs offer online applications and data storage in addition to Internet access.

Second, the applications themselves will probably change. When most people think of applications, they think about such programs as spreadsheets and word processors, call-management databases, and CAD programs. If an online application manages vending machines, the company that offers the application might still be an ASP but most people might not recognize it as such.

As ASPs mature, they might not need a unique moniker to sell themselves. Internally, we'll continue to use the abbreviation because it's descriptive for the people who provide ASP services. Externally, it doesn't matter: customers will buy the features and services, not the name.