IDC believes that the HSP market is now in a growth phase. To capitalize on market developments, HSPs will need to broaden their reach and appeal in volume markets such as small business ecommerce enablement. Today, the most dramatic market growth is being driven by small business and its embrace of ecommerce. In 1999, however, HSPs such as Verio and MindSpring held their top 10 status primarily through revenues produced by the volume, small business market. As the market matures, HSPs will need to build channels to this volume market and find ways of increasing the revenue stream from these traditionally low-value accounts.
ASPs can help on both fronts.
The business ecology of partners and channels building around ASPs rests solidly on the foundation and the success of hosted services. HSPs can function as both hub and spoke for ASP businesses. In some cases, HSPs are developing their own ASP business, but for the majority, partnering will remain the most cost effective and fastest means of addressing new markets and adding the volume needed to fill new datacenters. Unlike the early, larger business accounts, many of which sought server space for in-house IT programs, newer, small business customers are more likely to look for total solutions. Many of these accounts coming into the datacenter as ASP customers will be seeking ecommerce enablement and other lucrative outsourced IT services.