Observers of the ASP industry noted six months ago that their world had changed, as numerous marquee pioneers abandoned the niche; radically overhauled their strategies; or were acquired by larger, more mainstream companies.
Now, the most public face of those companies, the ASP Industry Consortium—taken over last month by the Computing Technology Industry Association, or CompTIA—has met the very fate of many of its members and truly represents them in ways it never intended.
The 3-year-old, not-for-profit consortium agreed to be acquired by CompTIA, of Oakbrook Terrace, Ill., so its membership could be exposed to the broader IT community and so itd have a say in setting application service provider protocols and standards, said Chairwoman Paula Hunter, vice president of marketing at Xevo Corp., a maker of ASP infrastructure in Marlboro, Mass.
But insiders said the behind-the-scenes story was much different. In the past 12 months, the consortiums membership dwindled from almost 800 to about 350, the political infighting that was present at its inception rekindled this summer over arguments in strategy, costs were becoming a problem and remaining members began to complain of getting little return for their significant dues, sources said.
In addition, the consortium had talks with another organization, the Washington-based Software & Information Industry Association, sources said. But that deal may have been blocked by Microsoft Corp. as retaliation for the SIIAs opinions about the Redmond, Wash., software companys legal problems, sources said.
The minimization of the once-high-flying Consortium came down to its value to members, according to insiders.
"It did absolutely, positively nothing for [end users]. There was no positive effect that it had on a customer, ever," said Roger Gallego, former senior vice president of strategy at FutureLink Corp., a defunct ASP in Lake Forest, Calif., whose founder, Cameron Chell, was also one of the consortiums co-founders, with Citrix Systems Inc.s vice president of strategy, Trevor Gruen- Kennedy.
"The reason that we made the decision at FutureLink to drop our membership in the consortium is that we saw absolutely no value to the company. It was hard enough for the ASPs themselves to decide on strategic direction. ... It was impossible for a group of companies with their own endeavors to be a guiding light for others. Everybody got so focused on their own businesses," Gallego said.
Hunter declined to comment on the consortiums finances but defended the active members. "The board was unanimous in its support of this agreement," she said. "Im very happy with the level of membership that we have right now."
Still, Hunter said, "Its been a tough economic time, [and] membership dues are something that gets very carefully scrutinized during tough economic times. Anyone that didnt volunteer to assist in the development of programs should look in the mirror."
A year ago, things were different. At Comdex last year, the consortium sponsored an entire pavilion and the ASP Summit; officials announced an international service-level-agreement standard in conjunction with the United Nations; membership approached 800; and they raffled a big-screen television. Numerous members, including BMC Software Inc. and McAfee Corp., had news of their own. The niche in general was even gaining momentum from nonmembers, such as Corio Inc. and USinternetworking Inc.
Things began to sour soon after. Bankruptcies or restructurings came from the likes of FutureLink, Breakaway Solutions Inc., Interliant Inc. and cMeRun Corp. Stock prices at nearly every public ASP of note plummeted, and many smaller, private companies either closed or were bought out by larger companies. Many relied on dot-com customers and spent heavily on infrastructure and software licensees before they had users to necessitate them.
Moreover, Citrix officials, in Fort Lauderdale, Fla., have indicated that the ASP business is no longer a priority for them. USinternetworking, of Annapolis, Md., is rumored to be at odds with titans such as Microsoft.
The major lack of benefit beyond the inner circle of early ASPs was definitely an Achilles heel, said analyst Kneko Burney, of Cahners In-Stat Group, in Scottsdale, Ariz. "That was what originally was supposed to be the purpose ... but none of those things came out of it," Burney said. "Its typical of whats going on in the ASP industry. Its sort of more pomp than circumstance; it rode the wave of a lot of hype."
Most consortium members declined to speak on the record, as many were told by Hunter and other board members not to do so, sources told eWeek.
Despite the gloom and secrecy, the benefits of being a part of CompTIA are real, Burney added.
"The future of hosted applications is a brighter one [because] it will be based on reality," she said.
Even horizontal ASPs that have survived tended to severely narrow their focus in the past year. A few patient and well-managed ones may survive, but the most successful will be those that are regionally or vertically focused, experts say.
Those that fundamentally remain a delivery mechanism for ISVs should also fare well, according to industry sources.