ASP sector shakeout predicted



John Sabine

THE ASP (application service provider) market is set to change dramatically, according to Gartner Group analysts....



John Sabine

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.

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