IDC: ASP's - bells and whistles or market reality?

Among the hype and hoopla surrounding the application service provider (ASP) market, research gurus International Data Corporation (IDC) is finalising a report into the current state of play for the Asia Pacific region.

IDC predicts that although the market will show strong compound annual growth rate of around 87 per cent, expected revenues don't justify the current industry fervor surrounding the new business model.

Asia Pacific revenues are only likely to capitalise around AUS$185 million by 2004 according to the latest figures, and Merv Langby, chief analyst services for IDC, told ARN the interest generated by ASPs is largely unwarranted.

"There's been far too much hype. If you're thinking of making a lot of money in this market, think again," Langby said. "The model is plausible, and our research shows there is strong grounds for support of [ASPs]."

Langby claims that while much of the attention has been focussed on the enterprise space, SME's with their limited expenditure and typically resource-starved infrastructure provides a "better fit" for the ASP model.

Its early days yet for the Australian market but Langby believes ASPs will be a market reality that will start ramping up over the next 9-12 months.

"But we're still a long way shy of critical mass," he said.

Langby points out a number of market inhibitors which are taking its toll on ASP adoption within the region including, a lack of customer awareness and mindset towards renting software delivery, concerns over security and awareness, and applications which are not "ASP-ready."

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