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Cutting Up the ASP Market

Venture Capital

from the future-market-mover dept

Mon, Sep 18th 2000 2:04pm — Ryan
Disclosure: I’m currently working for an ASP business. Now, that we’re seeing the return of common sense in technology investments. Are institutional investors starting to look at certain ASP markets again? The latest investment by Oracle and Kleiner Perkins in Portera suggests that there is still some steam left in this part of the market. The problem being that all ASPs are not created equal, certain business functions are much more ready for outsourcing than others and therefore more likely to lead to successful company adoption.
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  • icon
    Mike (profile), 18 Sep 2000 @ 3:22pm

    Overhyped

    I have to admit... I think to some extent the ASP market has been way overhyped. Yes, there are some areas where it is useful, but the majority of ASP businesses out there are in complete denial over the idea that other companies will trust mission critical apps to be outsourced to unproven companies.

    [ link to this | view in chronology ]

    • identicon
      Ryan, 19 Sep 2000 @ 4:11am

      Re: Overhyped

      Remember Mike, it's all about the pain factor that different services cause companies. Some companies have terribly run IT departments, when they mess up slightly the whole company feels it. Some of my friends have had their email down at work for several hours at a time, on a fairly frequent basis (which isn't acceptable for modern companies). ASP's offer a general level of service which is essential.

      However, there are some ASP's that offer apps that basically don't really differentiate themselves from boxed versions (why pay a continued service fee when you can just pay a one time license fee). These boxed app ASP's will probably a sinking feeling soon.

      [ link to this | view in chronology ]

      • icon
        Mike (profile), 19 Sep 2000 @ 12:09pm

        Re: Overhyped

        It's not just the app that often has me concerned but the fact that you're reliant on a company that doesn't necessarily have your interests aligned with their own. Admittedly, ASPs are attractive when your inhouse IT sucks. However, at least with inhouse IT you can fix things quickly and customize more easily. When you outsource it completely, there's the potential that your the last one they care about if something goes wrong... and any customizations you want may also go to the end of the queue. I definitely see where there are some advantages, but I think a lot of companies in the ASP business need to be better prepared on a lot of fronts in order to convince businesses to work with them.

        [ link to this | view in chronology ]


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