IDC Projects Worldwide ASP Spending Will Approach $8 Billion in 2004

FRAMINGHAM, MASS., MARCH 13, 2000 — At $296 million in 1999, worldwide spending on application service provider (ASP) services was minute in proportion to the amount of media attention ASPs received, but that's all about to change. IDC today released a report that says ASP spending will grow to $7.8 billion by 2004. This surge in spending translates to a 92% compound annual growth rate from 1999 to 2004.

"Factors that contributed to the limited spending in 1999 were the immaturity of ASP offerings and low customer awareness. However, throughout the year, ASPs announced an increasing number of customer acquisitions," said Meredith Whalen, manager for IDC's Application Service Provider research program. "Also, the ASP concept has been endorsed by several of the IT industry's most influential players, including AT&T, IBM, Microsoft, and Sun. Their commitment is resulting in the applications, infrastructure, and services needed to drive growth in the market."

The increase in customer acquisitions is being brought about by customers' realization that they can gain access to new applications without initial investments in application licenses, servers, people, and other resources.

According to IDC, another factor contributing to the ASP market's growth is the emergence of the collaborative and personal segments. In 1999, spending on enterprise applications, which include industry-specific and analytical applications, dominated the mix of ASP services, accounting for approximately 66% of ASP spending. Combined, collaborative applications, which include groupware, document management, and email, and personal applications, consisting of office suites and consumer-oriented applications, accounted for the remaining one-third of ASP spending. By 2004, their combined share will jump to 50%.

"Because they are network centric, collaborative applications are well-suited for the ASP model," said Amy Mizoras, an analyst with IDC's Application Service Provider research program. "Growth in the personal ASP segment will be fueled by consumers, and as more homes get broadband Internet access, consumer spending on ASP services will increase."

IDC's new report Worldwide ASP Market Size and Forecast, 1999-2004 (IDC #B21780) examines how large the opportunity is in the worldwide ASP market and how large it will be through 2004. The forecast includes spending for the enterprise, collaborative, and personal segments combined. Past forecasts have focused solely on the enterprise segment. The report compares spending in the three segments. It thoroughly defines and explains the ASP concept, describes the differences between the three major segments, and discusses applications available through the ASP delivery model. Additionally, the report lists upcoming research from IDC's ASP group. To order a copy of the report, contact Sally Donovan at 1-800-343-4952, ext. 4219 or at sdonovan@idc.com.

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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