New IDC Report Defines Emerging ASP Market and Vendors

FRAMINGHAM, Mass., March 29, 1999 — Spending in the high-end application service provider (ASP) market will reach $2 billion by 2003, representing a 91% four-year compound annual growth rate. This data comes from a new International Data Corporation (IDC) bulletin, Worldwide Application Service Provider Forecast, 1998-2003, which presents IDC's first-ever forecast for the ASP market.

According to IDC, who defined and coined the term ASP, ASPs are service firms that provide a contractual service offering to deploy, host, manage, and lease what is typically packaged application software from a centrally managed facility. Customers gain access to the applications through the Internet or dedicated leased lines. IDC considers "high-end" ASPs those service firms that go beyond the mere hosting and maintenance of simple applications. High-end ASPs manage complex application environments (e.g., ERP) by providing services such as up-front consulting, customization and extension of the application, and ongoing technical support. High-end ASPs include USinternetworking, IBM Global Services, EDS, USWeb, FutureLink, Oracle Online, Corio, ServiceNet, and World Technology Service.

IDC expects the ASP market to be driven by the increased acceptance of outsourcing, vendor ASP evangelism, mergers and acquisitions, improved networking technology, and e-commerce. Market inhibitors include customer acceptance, optimization of applications to run over the Internet, and continued support from independent software vendors. To overcome these concerns and grow the market, ASPs must create industry confidence through established and successful long-term customer references.

"The reality is that the high-end ASP market is an emerging market with few customers to date," said Meredith McCarty, Senior Analyst with IDC's Internet Services research program. "Nineteen ninety-nine will be a turning point as ASPs hit the streets with their service offerings and the market responds. After 1999, we'll have a better idea about how well and how fast the ASP concept will be accepted."

To order IDC's bulletin Worldwide Application Service Provider Forecast, 1998- 2003 (IDC #W18664), contact Cheryl Toffel at 1-800-343-4952, ext. 4389 or at ctoffel@idc.com.

About IDC

International Data Corporation is the information technology industry's most comprehensive resource on worldwide IT markets, trends, products, vendors, and geographies. IDC provides data, analysis, and advisory services to the world's leading IT suppliers as well as IS professionals in finance, insurance, entertainment, advertising, consumer goods, and publishing. IDC's research and opinions are based on the results of more than 300,000 end-user surveys, in-depth competitive analysis, broad technology coverage, and strategic analysis. IDC is committed to providing global research with local content through its 500 analysts in more than 40 countries worldwide. Additional information on IDC can be found on its Web site 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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