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January/February 2001

Growing The ASP Market Through Partnerships

BY TRACY WEMETT

The application service provider (ASP) market exploded with the advent and adoption of broadband services. These interactive applications have piqued the interest of Fortune 500 companies to e-businesses run out of garages. Everyone wants to deploy the latest and greatest technologies, but there have been barriers to widespread adoption.

Companies do not always want to bring these new applications in-house, due to concern they'll tie up networks and IT staff. Keeping informed on the ever-changing technologies alone requires a dedicated staff person. It seems that once version 1.0 is installed, version 2.0 is already being called pass. The interest in enhanced services continues to grow, forcing companies to find ways to reconcile their internal issues and keep up with technology trends.

ASPs appeared on the scene to solve these internal resource problem with an outsourced option. For years, companies have outsourced various office functions such as paychecks, with the understanding that their bank, for example, would have greater expertise in handling this service. Now, IT departments can take a similar approach in outsourcing state-of-the-art broadband-based services. This strategy allows companies to focus on their core competency (such as content delivery) rather than being bogged down with ever-evolving technologies that perpetuate a constant learning curve.

Increased access to high-speed connections through DSL and cable modems has amplified the demand for ASPs to offer new broadband applications. As the Internet has evolved from simply being an information network to an all-encompassing communications medium, the idea of interacting with voice and video applications appeals to most users. Voice and video are already being integrated into enterprises, instant messengers, e-commerce, and call centers around the world, driving many ASPs to think about adding these interactive capabilities to their current service offerings.

The old saying "Jack of all trades, master of none" finds new life in today's technology market. Just as corporate IT departments cannot be expected to manage their core business along with enhanced applications, traditional ASPs cannot be expected to manage and implement every new advancement on the technology scene.

In response to this need to expand services, a new breed of specialized communications ASPs is emerging, offering unprecedented broadband application quality with minimal network disruption. The ASP's consultants assess clients; current network configurations and needs to design an interactive communications solution customized to fit the application scenario. Moreover, these consultants can help develop and integrate hosted services into a company's offerings. Specialized ASPs help to bridge the technology gap, providing expertise in a particular niche technology (voice, video, data collaboration, etc.)

Regardless of their quality and expertise, these specialized ASPs cannot sufficiently stand on their own in the crowded hosting market. A traditional ASP has an established customer base and an intricate knowledge of customer networks, while a specialized ASP has a more focused concentration and is often better suited to providing value-added services to other service providers than directly to the end user. The specialized ASP understands how the technology works in different environments and, through consultants, can best configure the application to deliver the expected results. A pairing of the niche focus of a specialized ASP with the resources and customer base of a traditional ASP benefits both parties by delivering the highest quality service and feature-rich offerings to the end user.

When a traditional ASP speaks to a potential customer about adding enhanced broadband services to their network, they often don't know exactly how the customer plans to use them. Occasionally, the applications exceed customer expectations. The customer may have a specific purpose in mind for the service upfront, but once deployed may expand the use of the technology. By examining the network with input from internal IT departments and an existing ASP, the specialized application provider may be able to suggest additional uses for the technology. This specialization enables portals and corporations alike to integrate interactive technologies they may never have been deployed in-house.

Achieving this level of success depends on strategic partnering between existing ASPs and ISPs, and the burgeoning specialized ASP market. Value-added voice and visual communications services can be integrated by traditional ASPs/ISPs in a variety of ways:

Conferencing On Demand
Whether a service provider's customer base is consumer or enterprise users, there is a model for adding voice and video services for conferencing on demand. For consumers, it is a value-added service that allows them to see and talk with friends and family online, either one-on-one or in groups (sometimes even replacing long-distance phone communication). It is most often offered as a premium-level service for an additional fee per month that provides unlimited usage to the customer.

For the enterprise, conferencing on demand offers a way for workgroups to collaborate more effectively online with true face-to-face interaction. While Web-based conferencing and voice over IP (VoIP) applications are increasingly being used, interactive Web-based videoconferencing is still in its infancy. ASPs and ISPs with enterprise customers can either choose to charge a monthly fee for conferencing, or have customers pay per usage (a set rate per participant, per hour, similar to the way telephone-based conference calls are billed).

Internet-Based Group Videochat
Portal or community sites may outsource enhanced services to increase their number of visitors, attract new customers, and increase the amount of time the average visitor spends on the site. To these ends, Internet videochat is a powerful tool for increasing interaction between site visitors and providing a compelling set of features that attract new users. Unlike conferencing on demand, videochat allows users to participate in public videochat rooms rather than private ones, and encourages users to interact and meet new people in a group setting. ASPs can offer this on a site for free to increase traffic and derive revenue from peripheral advertising and sponsorships. Or, they may charge a monthly usage fee, particularly if the site provides specific content in relation to the videochat.

Web-Based Events
Web-based conferencing opens up a number of possibilities for interactive events such as conferences and seminars, interactive concerts, or Web-based talk shows. Events can be one-time or recurring, and can scale to include much larger groups of people. They can use a combination of live, interactive voice and video as well as streaming media technologies to suit a particular application scenario. ASPs might host these events, particularly in vertical markets such as entertainment. Revenue for events can be derived from sponsorships, paid by the attendees, or generated through merchandising.

Value-added communications services such as live voice and video are stretching the way the Internet and IP networks are being used. Through a variety of implementations, there is a growing opportunity for traditional ASPs and specialized ASPs to work together to meet the demand for new Internet-based applications in both the consumer and enterprise markets.

Tracy Wemett is the director of marketing for CUseeMe Networks. The company develops software solutions that facilitate worldwide video and audio communication and data collaboration across the Internet. CUseeMe Web provides the industry's first multipoint video instant messaging over the Internet. CUseeMe Pro and CUseeMe Conference Server create a client-server solution that allow multiple users to participate simultaneously in conferences over the Internet. ClassPoint is a CUseeMe Conference Server add-on that provides a complete solution for corporate training and distance learning. The company supports multiple platforms, including Windows 95/98, NT, Sun Solaris, and Red Hat Linux.







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