The New Generation of ASPs Has Learned Much from the Experiences of Their Predecessors, IDC Says

FRAMINGHAM, MA – APRIL 4, 2001 – The next generation of application service providers (ASPs) has emerged, and they are determined to improve upon the mistakes of the first-generation ASPs. According to IDC, this next generation has learned a great deal from watching the first generation, but will encounter its own unique hurdles.


"First-generation ASPs that deliver applications around client/server third-party software struggle with issues related to scaling and integration,"said Jessica Goepfert, senior analyst with IDC’s Application Service Providers research program. "Because the next-generation ASPs are designing their applications specifically for the ASP model, they will not grapple with these issues. Instead, they must contend with tremendous challenges in the areas of brand recognition, reputation, and quality of service."

Next-generation ASPs have also learned a valuable lesson about infrastructure strategy from their predecessors. "A sophisticated infrastructure is key to delivering software as a service, but it is also very costly," Goepfert said. "Many early ASPs spent precious resources building their infrastructure and ended up with excess capacity and cash deplete. Learning from that experience, today’s ASPs are forming partnerships to help with their infrastructure needs."

The ASP market is characterized by media hype and misunderstanding. IDC believes that the next generation of ASPs could further muddy the waters if they try to disassociate themselves from the "ASP" acronym. Instead, they should focus on why they believe their methods are an improvement over their predecessors.

IDC recently published A New Generation of ASPs Emerges: Software as a Service (IDC #B24207). This study analyzes the attributes of the newest ASPs and compares them with first-generation ASPs. To purchase this bulletin, contact Jim Nagle at 1-800-343-4952, extension 4549, or at

About IDC

IDC delivers dependable, high-impact insights and advice on the future of ebusiness, the Internet, and technology to help organizations make sound business decisions. IDC forecasts worldwide markets and trends and analyzes business strategies, technologies, and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC provides global research with local content through more than 700 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at

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


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