Managed internet services firm Vistorm has restructured its European application service provider (ASP) business with the loss of 10 jobs.
The cuts come as the firm switches focus to its managed internet security business, which has grown rapidly in the last year following hundreds of successful hacking attacks on blue chip companies in the UK and worldwide.
Guy Tarring, marketing director at Vistorm, told vnunet.com that the sector was overcrowded. "One of the issues with ASPs is that it has been one of the most hyped words in the IT industry for a very long time," he said.
"During the last year we've learnt a great deal about the ASP market. It is still nascent, it is still growing and it is not a high proportion of our revenues at the moment, but we believe it will be in the future," he added.
Richard Wendland, an analyst at Durlacher, said the UK layoffs would not affect Vistorm's overall ASP business. "Worldwide, Vistorm has one of the strongest line-ups of employees in the ASP market," he said.
However, other analysts warned that Vistorm's move was bad news for the much-touted sector.
Nicole France, a senior analyst at Gartner Dataquest, said: "More firms are going to go out of this market. It is a top-heavy business requiring a significant investment, and it could be anywhere from 10 to 18 months before we see enough adoption for ASPs with this kind of functionality to be viable in the market."
Lisa Danielsson, a consultant at analyst Schema, commented: "Vistorm is one of the more well known ASPs and this is an indicator of how much ASPs have been struggling to grow the market."
"I haven't lost confidence in the ASP market, but it is going to look very different in a year's time. We'll see a lot of ASPs scale down their business and team with larger players," she added.
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