IDC: USi leads worldwide ASP market

Annapolis, Md., application service provider USinternetworking Inc., whose customer list includes Hershey Foods, Legg Mason and Kinkos, leads the worldwide ASP market, according to market research firm International Data Corp.

Meredith Whalen, director of ASP and Internet Services at IDC, listed the top 10 ASPs of 2000 at the research firm's AppSourcing Forum here. It's the first time IDC has released rankings for companies in the nascent ASP market.

IDC measured revenue, customer numbers, average contract size and other factors to rank the companies.

USi ranked first with US$100 million in revenue for 2000. Tied at second were TriZetto Group, a vertical ASP focused on the healthcare industry, and Oracle Corp., each with $54 million in revenue; fourth was Interliant Inc. with $49 million; Qwest Cyber.Solutions LLC was fifth with $46 million; Corio Inc. was sixth with $43 million; eOnline was seventh with $27 million; IBM Corp. ranked eighth with $26 million; and SureBridge Inc. and Electronic Data Systems Corp. tied with $25 million apiece.

Whalen says that despite a rocky few months for ASPs, the industry is not dead. In fact, the market topped IDC's estimate in 2000, reaching $926 million compared to an expected $633 million in total revenue. Last year, IDC predicted the market would reach $7.8 billion by 2004; estimates now peg the market at nearly $24 billion by 2005.

But the path to the future won't be a smooth one for all ASPs, as consolidation in the market continues, Whalen says. She says the top ASPs likely will not remain the same in 2001, as shifting continues.

Whalen says for 2000, the companies that provided all of the ASP services themselves, rather than partnering with other providers, collected more in revenue. USinternetworking, for example, built its own data centers to host the applications it provides. In addition, IDC measured only retail ASP service, so, for example, while EDS has a large wholesale business, USi tops all competitors with sales directly to the end user.

In the future, Whalen says, ASPs must differentiate themselves with unique services that are difficult to copy, such as support services for specific business processes. Simply being profitable will not be enough, she says.

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