Success predicted for UK in ASP market

The UK and Europe present a bigger opportunity for application service providers than the US, according to new entrant into this market, Fujitsu Siemens.

The company, which entered the ASP market as a platform supplier at the beginning of the year, said the UK and European markets represent a huge opportunity because of the number of small and medium business (SMEs) in the region.

Joseph Reger, Fujitsu Siemens vice president of strategic marketing, said: "There are many more SMEs in Europe than there are in the US and other countries. The ASP model is appealing to them as often they do not have any IT infrastructure at all.

"Also, the ASP market's fiscal model is based on usage, per seat, per month, which is very attractive and perfectly calculable."

He added that it was also appealing to companies who are finding it difficult to hire staff to manage and install IT systems.

Reger said the ASP market is growing at a rate of 92 per cent per year and spending in this market is expected by analysts to grow to $7.8bn by 2004. Analyst IDC said the ASP market generated around $296m in 1999.

"In 2004 we are aiming to generate around $250m in hardware sales in this market," he added. However, he was unable to say what percentage of the company's total hardware sales this figure represented.

Reger said the UK is now only three to six months behind the ASP market in the US.

"We are shortening the gap and 12 months from now we will be the leader. The days are gone when the US has a two-year lead," he added.

IDC analyst, Ewan Davis, said that although he believed the UK is further behind the US than Fujitsu Siemens predicts, the UK will be one of the largest regions in the market over the next few years.

"The ASP market is very small in Europe at the moment. The areas in which it will grow the most are the UK, Nordic regions and Benelux. Telecoms are important in this market and these countries have the right infrastructure for hosting these types of application," he said.

A survey conducted by market researcher Ovum revealed that two thirds of businesses in the UK and Germany expect to purchase application services from an ASP over the next 18 months.

The industry sectors most attracted to the ASP model in these regions are banking and financial services, transport and utilities, and travel and tourism.