European ASP Industry Spending to Reach $5.8 Billion by 2005, IDC Says

LONDON – MAY 25, 2001 – According to IDC, the European application service provider (ASP) market underwent rapid market formation in 2000. In addition to the "pure play" ASPs, leading IT vendors, whether application, services, telecommunications, ISP, or network vendors, are all rapidly developing ASP market-entry strategies. The market will continue to generate interest over the next five years, embracing more areas of the IT industry and developing into a multibillion-dollar opportunity with a compound annual growth rate of 128% from 2000-2005.


"The term ASP has been greatly overused since its inception and has fallen from favor since late 2000," said James Eibisch, research manager of IDC’s European ASP and Web Hosting program. "Although many service providers (SPs) and IT companies are de-emphasizing the ASP tag, to dismiss the phenomenon is a mistake. As in other areas of the IT industry, larger IT players are starting to gain a second-mover advantage."

"Many first-mover ASPs within Europe were U.S.-based, and stock market corrections have forced a widespread scaling down of costly expansion within the region," said Euan Davis, senior research analyst with IDC’s European Services research group. High-profile business failures, redundancies, and repositioning are also evident. By contrast, Europe’s ASP industry has its own flavor, dominated by telecom/NSP and software vendors. "ASP operations are faring well in Europe, serving clients with local applications and support," Davis added.

Consolidation will continue as struggling ASPs lose funding. "Larger second movers are starting to resolve internal operational and business issues of the one-to-many model. Once this occurs, widespread market education will resolve many of the perceptions of problems ASPs have been faced with," Davis said.

"The ASP phenomenon is part of a long-term trend to provide many types of IT and non-IT service in the form of a utility, using the Internet as a power grid," Davis continued. "The term xSP is emerging as the industry’s preferred term. The use of xSPs in the future will enable networked organizations to become more flexible, limiting the number and variety of internal business processes that need to be managed."

European ASP Services, Review and Forecast, 2000-2005 (IDC #HA01H) details major trends and key drivers and inhibitors for the European ASP industry. Also included are an identification of Europe’s leading ASPs and ASP enablers, a partnership map of the ASP industry in Europe, the preferred pricing, sales, and operational business models and end-user spending on ASP services split by country, software type, and company size. This report is available to purchase from your local IDC office.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world’s leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at

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