THE ASP (application service provider) market is set to change dramatically, according to Gartner Group analysts.
Gartner expects 60% of ASPs worldwide to be out of the market by the end of 2001, but said this would be coupled with an explosive growth in revenues, from $1bn this year to over $25bn (£15.6bn) by 2004.
The biggest growth is likely to be in the enterprise computing market, as divisions of large corporations pick up on the advantages of guaranteed costs and low up-front expenditure.
Gartner's Nicole France expects vertical market business to soar as well, as ASPs develop turnkey solutions for particular industries.
But although specialist ASPs will prosper, France sees short-term growth in the number of generalists soon leading to consolidation.
Firms that have come into the market just because ASP is a buzzword will go to the wall as venture capitalists withdraw funding, Gartner predicted. Mergers, it said, will allow larger firms to grow their client numbers.
Jim Shaw, e-business manager at ASP Softlab, agreed with Gartner's line. "We see organisations struggling every day to solve their IT problems and then to retain people," he said.