Fortunes to be made – ASP revenues approach $1 billion

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Despite the challenges faced by application service providers (ASPs), revenues are increasing at a blistering compound annual growth rate of 89% that will propel them from $986 million in 2000 to almost $24 billion in 2005.

“Despite the well-publicized challenges facing the ASP market today, the ASP industry is moving beyond the days of hype and producing some real success stories,” said senior analyst Amy Mizoras. “Our data clearly shows that ASPs are alive and kicking.”

The adoption of ASP services within large companies and the formation of supplier partnerships are contributing to this growth.

Where are Europe's professionals?
The United States will remain the largest market for ASP services through 2005, but Western Europe represents an emerging opportunity. ASP revenues there will soar from $93 million in 2000 to over $5.7 billion in 2005, a CAGR of 128%. The lack of skilled IT professionals and the sophistication of service-level agreements are contributing to Western Europe’s ASP market growth.

ASP services for personal and collaborative applications will also present a growing opportunity throughout 2005. Although these applications accounted for just 30% of the market in 2000, by 2005 their combined share will increase to 45%.

Dominant suppliers
Although IDC believes the ASP market’s continued growth is a certainty, there is still much uncertainty about which vendors will emerge as market leaders.

“It’s generally accepted that software as a service concept will become the accepted delivery model for application functionality. However what is yet to be determined is who will be the dominant suppliers of these ASP services,” said Jessica Goepfert, senior analyst for IDC’s ASP research program.

“This means that even the ASPs who are the current market leaders cannot afford to rest on their laurels.”

IDC’s bulletin Worldwide ASP Forecast and Analysis, 2001-2005 forecasts revenues through 2005 by region. Spending by application type is also examined. The bulletin analyzes the ASP landscape, market challenges, and factors driving growth.

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. Among IDC’s customers are the world’s leading IT suppliers, IT organizations, ebusiness companies and the financial community.

IDC

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