Don’t Worry, Be Happy

When there’s so much pessimism in the air about the business outlook for the world economy, and for the technology sector in particular, it’s probably not surprising that ASPs — who after all were among the most-hyped of last year’s fads — have found themselves plunged into an atmosphere of despondency and gloom.

But while things seem to be much worse this year when measured against the feverish optimism of late 1999 and early 2000, the impression is misleading. Look at the facts, and it becomes evident that, despite the downbeat mood of many of its participants, the ASP industry is stronger than ever.

Although it’s still way too early for anyone to start resting on their laurels — no-one succeeds in this industry that isn’t in it for the long haul — it’s already clear that the ASP model is here to stay, and is destined to thrive. Here are my ASPnews Top 10 Reasons to Be Happy about being an ASP.

1. Revenues just keep on growing
   Whatever happens to individual ASPs, the total revenues of the industry just keep on soaring ever higher. Remember all those analyst projections back in 1999 that the industry would be worth twenty-something billion by 2004? Don’t write them off — this is already a multi-billion dollar industry, worth upwards of $2 billion worldwide last year and on track to double or triple in size this year.
2. Total customer numbers keep on growing
   Every day, hundreds of businesses sign up with ASPs around the world. Sure, it doesn’t suit all of them, and some drift away. But each day, the total worldwide number of satisfied customers of ASP services goes up another notch.
3. Millions worldwide are ASP users
   McAfee.com alone has over a million paying subscribers. Hosted enterprise expense tracking ISV Captura has more than half a million seats. That’s just two out of thousands of providers. Add all their users together and the total is certainly in excess of 8 million, probably double that — users who are getting accustomed to the concept of accessing their software from external providers. And that’s just the paying users. Out of 300 million total Internet users in the world today, how many are already using ASP services? Up to 5 percent use paid services and as many as a third use some kind of online application.
4. Venture finance is flowing again
   Last month, Hire.com, iVita, Viaken and Workadia were just some of the ASPs to close VC funding rounds. It may be only a trickle for now, but investor confidence in the model is starting to return. That flow will gain pace as soon as IPOs return to Nasdaq. Look out for some major, storming stock market debuts by eye-catching ASPs this fall.
5. Infrastructure costs are falling
   More than any other factor, it was falling telecoms costs that enabled the ASP model. Now there’s a glut of hosting space that ASPs can take advantage of, while connection costs continue to plummet. It has never cost less to fit out an ASP.
6. There’s an established infrastructure
   After more than three years of pioneering and experimentation, everyone in the industry has begun to understand the different roles played by hosting providers, infrastructure providers, MSPs and ASPs. At the same time, the software and standards for the ASP model have been falling into place. This is no longer an untried field. It’s a recognized science.
7. New ASPs appear every day
   If this were a passing fad, wouldn’t the numbers of companies wanting to be ASPs start dropping off? There seems to be no let-up in the numbers of new ASP ventures that appear. The only difference is that nowadays many of them choose to call themselves vertical service providers, business service providers or infrastructure service providers. The underlying model is still ASP.
8. ISVs keep signing up to the ASP model
   Software vendors don’t make such a big song and dance about it these days, but the numbers that set up ASP divisions or offer ASP versions of their products for others to host still keeps on growing. They still acknowledge that it’s the future of their industry.
9. Large enterprises are becoming ASPs
   The ASP model is now invading the large enterprise sector, with banks and telcos hosting services for their small business clients, while manufacturers host applications for suppliers, channel partners and customers. Many pureplay ASPs are now becoming private-label providers of ASP capabilities to such companies.
10. This is mainstream
    This isn’t a faddish idea any more; it’s entered the mainstream. Having an ASP strategy is now de rigueur for all software vendors, business service providers and enterprise channel masters. Forget the hype; ASP isn’t an idea, it’s a fixture. It’s here to stay.

This article was reprinted from ASPnews.com, an INT Media Group site.