ASP Spending in Europe Projected to Grow at Dizzying Rate for Next Five Years, IDC Says

AMSTERDAM, APRIL 18, 2000- IDC expects a $1.19 billion high-end application service provider (ASP) European opportunity to develop over the next five years (2000-2005). European high-end ASP spending is projected to grow from $10 million in 1999, reflecting a five-year compound annual growth rate of 130% to 2004.

"Data from IDC's European ASP survey reveals that there are a limited number of live customers in 1999. We are predicting the market will spike in 2004-2005," said Euan Davis, IDC's European Services analyst.

While many ASPs originate from the United States, there are a number of homegrown ASPs starting to operate within Europe. The United Kingdom clearly is the early adopter market and presents a convenient stepping stone for U.S. ASPs wanting to establish operations in Europe. Other regions where English language ability is strong — Benelux and the Nordics —are predicted to have strong growth as well over the next five years, with the ASPs surveyed concentrating sales efforts here.

True ASPs operate on a one-to-many basis enabling the ASP to generate significant cost savings through volume, which can be passed to potential clients. Significant business value is therefore gained by the organization that selects an ASP solution — the traditional costs associated with rolling out applications are ceded to the ASP.

For the end user, theoretically requiring only a sole Internet connection negates all the infrastructure requirements of a traditional application rollout. It is the seismic shift from product to rental service that enables cost savings and reduces the total cost of ownership to the end user.

Business Drivers for the European ASP Market

— European expertise in WAP-enabled technology is now world class, and the ASP model will become even more compelling. End users can access their applications regardless of location, with further mobilization and home working within the workforce expected.

— The emergence of portals, vortals, and other online channels has the potential to revolutionize software distribution. Portals generically offer consumers and businesses a means of identifying the resources they require, and more are being set up within the European business community.

— New online markets present significant opportunity to software vendors. By having a presence and providing application functionality online through the portal, a greater awareness of the ASP's service offering is obtained than through traditional PR or advertising efforts. This significantly increases the ISVs' reach to market.

— More European organizations are participating in ecommerce, and the larger ebusiness phenomenon — the digital age — will provide the spur to more ASP operations in Europe as the data reveals more ecommerce-type applications available than other categories

At a European level a number of opportunities are evident on a country-by-country basis. "Countries never normally associated with sophisticated technological practice could conceivably leapfrog and adopt the ASP model," Davis said. "This presents real revenue opportunities for software vendors that own the application and the ASPs themselves that charge for it. Reassessing and understanding the opportunities around the ASP model will therefore prove important."

IDC's new report The European ASP Industry: A Strategic Perspective (IDC #RE03G) is an authoritative analysis based on quantitative data from European ASPs into current and future ASP activity within the region. This report is available for purchase from your local IDC office.

About IDC

IDC delivers dependable, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and technology trends and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of International Data Group, the world's leading IT media, research, and exposition company.

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