They lacked needed functionality, and could not provide needed levels of service reliability. Not to mention their most important problem their business models consisted of more vapor than their products. Price you charge the customer. Unfortunately, many ASPs charged prices well below that suggested by that formula, and eventually ran out of greedy investors to keep their businesses afloat. Reminds me of the old joke, We lose a dollar on every sale, but we make it up in volume.
Customers demand for a turnkey solution is real.
ASPs just need to start setting realistic expectations for what these services cost. Unlike buying a widget over the Web at less than cost in a one-time transaction, when an ASP goes out of business, so goes a customer s ability to transact business. Many of these users never stopped to think about what would happen to their data when their ASP went down. When someone offers an extranet service for less than the price of an AOL account, potential clients should go running for the hills. Investors also deserve a big slice of the blame pie.