Small Business Memo:
ASPs Will Survive Under a Brand Name

by Eric Grevstad

Sometimes Internet hype resembles the mad scramble of the Gold Rush; sometimes it’s more like the knights of “Monty Python and the Holy Grail” yelling, “Run away! Run away!” Right now, the dot-bomb shakeout is in full swing, and perhaps no Web vendors are feeling more heat than application service providers.

An ASP, as you probably know, lets customers subscribe to a service instead of buying conventional software. Rather than having to install, maintain, and upgrade applications, you and your employees use a browser interface to access programs and data on the ASP’s remote servers, whether at your desk or on the road, telecommuting from home or standing at an airport kiosk.

Once you accept the premise of more ubiquitous broadband access, the ASP concept is a powerful idea. It’s the core of Microsoft’s “.Net” plan for future versions of Windows and Office. And lately, it’s about as popular as Ford Explorers with Firestone tires.

Last summer, the market analysts at Gartner Group predicted that 60 percent of today’s ASPs would be dead by 2002. Red Herring has joked that ASP stands for “awful stock pick,” and an IDC research officer expects use of the acronym to disappear altogether (“Vendors no longer want to be associated with this decimated sector”).

Just since December, Day-Timers Inc. closed its Day-Timer Digital site; Interact Commerce Corp. abandoned its ambitious plan to link its Act contact manager to a 40-function ASP site at; the suite died; ThinkFree Office dropped its free suite and hiked the price of its paid subscription; and the pioneering online intranet collapsed (even as Home Office Computing was naming it one of last year’s 100 best).

If you need any more clues as to which way the wind is blowing, just read the PR pitch I got last week on behalf of The ASP talked not about its own impressive services but about how it’s supplying XML-based tools to sites operated by the likes of Hewlett-Packard and the Small Business Administration. “Just as consumers typically trust Citibank more than, vJungle is betting that small business owners will trust HP, Office Depot, and the SBA as they venture online. It’s a win-win strategy that will be around long after many ASPs lay off their last 20-something.”

In other words, vJungle is saying that customers will shun no-name or silly-name dot-coms like Red Gorilla, OhGolly, and, um, vJungle. I’m actually a fan of the company’s services, along with those offered by NetLedger (which looks like a survivor, having established a strong lead in online accounting and an affiliation with Oracle) and (which this week seems to have lost one of the two sponsors whose screens I’m used to seeing at signoff). Yet, I do agree.

Call it snobbery, but I feel better logging onto than, just as your customers will feel better writing to instead of, or visiting a site with your own domain name rather than one supplied by a free Web hosting service. That said, I’ve got, and I’m not giving it up.

Do you see a light at the end of the ASP tunnel? Share your outsourced Web-site experiences in the Small Business Memo thread in the online discussion area.

Small Business Computing Staff
Small Business Computing Staff
Small Business Computing addresses the technology needs of small businesses, which are defined as businesses with fewer than 500 employees and/or less than $7 million in annual sales.
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