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Technology Stocks : The Application Service Provider (ASP) -- Ignore unavailable to you. Want to Upgrade?

To: 2MAR$ who wrote (63)	2/22/2000 4:38:00 PM
From: Techplayer	Respond to of 87

ASP comments...note projected growth at the end....Microsoft Goes Off Message He Shoots! He Misses! -------------------------------------------------------------------------------- NEW YORK--To date, Microsoft Corp. microsoft.com hasn?t said much about optical networking. But in a recent interview with Light Reading it finally took a position on what it means to the company. The answer? Not much. ?Optical networking is just more bandwidth. It shows that Moore?s law also applies for networking speeds,? says Thomas Koll, vice president of the Microsoft network solutions group. That dismissive philosophy runs contrary to the new thinking in networking, which has it that optical networking will do more than simply delivering big bandwidth. By reducing latency and increasing throughput many believe optical networking will herald a new age of networking, in which end users use low-cost terminals to access applications that are housed remotely on application service providers (ASPs) networks. It makes sense. While ASPs like Corio Inc. corio.com, EDS Network Computing Services Corp. eds.com, and Portera Systems Inc. portera.com have been making in-roads, their services haven't yet achieved widespread appeal. That?s because they?ve been gated by the amount of bandwidth available between the user and the server. Now that could change. "I do think that we will get to the point where optical networks make the location of the application from the user genuinely irrelevant," says James O'Donnell, vice-provost, information systems and computing, University of Pennsylvania. O?Donnell thinks optical networks will galvanize the whole application service provider (ASP) market. Analysts agree. International Data Corp. idc.com is predicting that ASP revenues will grow from $889 million in 1998 to $22.4 billion in 2003. -------------------------------------------------------------------------------- Luddite Philosophy -------------------------------------------------------------------------------- Microsoft?s Koll, meanwhile, takes a rather different position. ?People were talking about the ?thinning? of the client three years ago, and there was no realization of that,? says Koll. ?The PC will not go away. We don?t see that happening. We don?t believe that.? Koll?s words reveal a disparity in Microsoft?s message about next-gen networks. Publicly, it?s stated that it endorses the thin client model. Privately, it?s apparently not too happy about the potential impact on its core revenue stream: desktop apps running on Intel CPUs. "It?s hard for [Microsoft] to tear themselves away from Windows to get ASP applications right," says Professor Larry Peterson, professor of computer science at Princeton University. "They've had trouble doing this before," he adds. That?s reflected in Microsoft?s research and development program. So far, it has steered clear of developing its own solutions for thin client computing, choosing to support the technology via its investment in Citrix Systems Inc. citrix.com instead. Software platforms like those from Citrix., or its competitor GraphOn Corp. graphon.com, use client-server 'screen-scraper' technology to restrict the amount of traffic traveling between users and the apps running on remote servers, making it at least feasible to run these applications over low-speed lines. But it?s not an ideal solution, and it doesn?t work well at all for interactive apps. If the 800 pound gorilla of the software world continues to drag its knuckles on developing its own applications for optical networks it will be bad news for ASPs and their customers looking for widely available solutions. But it could also provide a big opportunity for Microsoft?s competitors. Sun Microsystems Inc. sun.com has announced products intended to allow ASPs also to offer services using Web-based technology to application-enable any device running a Web browser -- not just PCs, but also PDAs, palmtops, and even cellphones. In fact, it will give away both StarPortal (its platform) and StarOffice (its suite of office productivity applications) for free to ASPs, hoping to make its make its money back on server and storage hardware, and software support. Still, don't count Microsoft out yet. "Nobody has gotten rich by betting against Bill yet. The PC model is fragile, but he's got a while to prepare for the revolution," says O'Donnell. --Stephen Saunders, US Editor, Light Reading, lightreading.com -------------------------------------------------------------------------------- www.lightreading.com