HP targets ASPs, but warns of shake-up

Hewlett Packard (HP) says it is keen to sell its technology into the booming application service provider (ASP) space, but believes the number of potential customers will decline.

Speaking to vnunet.com, Phil Lawlor, managing director of HP in the UK, predicted that there would be a "shakeout" in the ASP marketplace but added that it was not clear if the "telcos or purists will win".

He added that whether enterprises will take up ASP offerings depends more on how they are marketed, and whether a business can trust third parties, than technology issues alone.

Analysts too have predicted that there will be a shakeout in the market. Gartner recently reported that 60 per cent of ASPs in business this year would close by the end of 2001, and Giga Information Group advised companies not to choose an ASP too early for the same reason.

However, the comments by Lawlor are significant because HP has been at the forefront of supplying technology to, and developing fresh business models for, the ASP sector. For example, in February HP announced it had taken a £4m stake in XTML, a privately owned ASP, in exchange for an option to take 10 per cent of XTML. HP also supplies all the servers at XTML.

This was the first time that the company has made an equity investment in a European startup, and comes nine months after it first announced its ebusiness strategy in an attempt to catch up with competitors, in particular Sun Microsystems.

"We realised that we missed out on initial internet infrastructure build-out, something that was more painful in the US and that we had to do something about it. The link was the launch of e-services," said Lawlor.

E-services refers to HP's vision of the internet as the delivery mechanism for services to consumers and businesses, a scheme Lawlor sees as complementary to Microsoft's .Net platform. With .Net Microsoft is redesigning its applications as services to be delivered over the internet.

In terms of its own technology, the key areas for HP will be servers, storage, mobility, digital imaging and printing.

As well as broadening out its product range, for example with the launch of the high-end Superdome server last month, HP has undergone a rebranding exercise, driven by charismatic chief executive, Carly Fiorina.

Lawlor explained: "We've consolidated brands, which were a collection of separate customer operations in separate market spaces. Now they're all the wood behind the arrow of HP invent."

A key focus for HP will be building up its services business, and Lawlor said that this would happen whether or not the proposed acquisition by HP and PricewaterhouseCoopers went through. For example, Lawlor said he recently hired 70 consultants.