Call It MS.ASP

Microsoft tries to remake the application service provider business model.

The word from Microsoft is that todays application service provider business model is a bust. The boys and girls from Redmond are now proselytizing a new vision for ASPs, one based on Web services.

Microsoft has been briefing service providers, software developers, systems integrators and analysts on a new strategy that it calls the Web Services Ecosystem. Building on top of Microsofts .Net strategy, the Web Services Ecosystem aims to replace todays vertically integrated ASP model, under which ASPs attempt to provide everything an enterprise needs from network connectivity to applications hosting, monitoring and integration.

The new model calls for more partnerships among service providers and essentially categorizes those players into three groups:

* the Web services developer, which is the evolved role of todays independent software vendors

* the application infrastructure provider, which provides the managed platforms on top of which Web services developers create Web services

* the Web services integrator, which plugs all of the Web services together for an enterprise customer

"The ecosystem defines the roles that everyone plays," says Gene Cornfield, strategy and market development manager for Web services and application hosting at Microsoft. "A company could play multiple roles," he adds, explaining that an ASP may choose to be both an infrastructure provider and a Web services integrator.

Cornfield says that by years end, Microsoft will roll out some partner programs based on the Web Services Ecosystem. He expects most enterprises to start making the switch from legacy software applications to Web services over the next two to three years.

Bills Bulls

ASP reaction to Microsofts Web Services Ecosystem proposal has been mixed.

TeleComputing, which has built its service on the Microsoft Windows platform, is bullish about the model. "We believe that Microsoft has the best vision for Web services and theyre in the best position in terms of an embedded base of customers," says Jason Donahue, CEO of TeleComputing. "We want to bet our business on the winner, and Microsoft seems like a pretty good bet with .Net."

USinternetworking, which got a $50 million investment from Microsoft last year, says it supports Microsofts ideas, but with some reservations. "I think Microsoft has certain things very much right, but I also think they have some things wrong," says Matt Howard, VP of marketing and business development at USi.

Howard agrees with Microsoft that most ASPs will have to move away from the vertically integrated, full-service model to one that makes more use of partnerships. "The vertically integrated ASP model was critical to validating the market," he says. "But as USi and the market continue to scale, its logical that there will be some disaggregation."

What Howard isnt certain about is the timing. "Im not so sure it will happen as quickly as they say," he says.

Corio, which has relationships with both Microsoft and its chief rival, Sun Microsystems, isnt sold on Web Services Ecosystem.

"Im very skeptical about any grandiose vision," says Corio CEO George Kadifa. "Theyre asking people to reengineer the way they use applications today. This is a massive change in enterprise computing, and it will take time."

Kadifa says he agrees with Microsoft that Web services are the future for software applications but adds hes not sure its wise to place all bets on one platform vendor. For that reason, Corio has been talking with Sun and IBM about their visions for Web services as well.

Not a Lock

Cornfield insists the Web Services Ecosystem is not an attempt to lock software developers and service providers into using the Microsoft platform. It is a way to build a community of developers and service providers that agree to use the same standards, he says. In fact, Microsoft wants its competitors to adopt the ecosystem. "We all share the same common vision of XML-based Web services," Cornfield says.

But getting Sun and IBM to buy into a vision laid out by Microsoft is unlikely, particularly when Sun is busy trying to evangelize its own Web services vision, Sun One. Last week, Sun unveiled the first of its promised Sun One software offerings.

A competing architecture isnt the only obstacle Microsoft faces in getting Sun to buy into the Web Services Ecosystem. Sun isnt ready to call the current ASP business model a flop.

"Saying the old ASP model failed is a spurious statement," says Seth Pinkham, general manager for go-to-market programs at Sun. "Its way too general. Some ASPs have succeeded."

TeleComputings Donahue contends that Sun may be reacting defensively because it feels threatened by its rival.

"Microsoft is pretty well positioned relative to the competition because it has such a large penetration on the enterprise desktop," Donahue says. "Sun doesnt have what it takes on the software side."