Many ASPs have staked out positions in the market and moved to develop their own Web-centric applications. And some of these applications are comparable to Microsoft's. Sun's StarOffice suite, in particular, is quite good and free to boot. Price point is another potential obstacle for Microsoft. The company's products are noted for high margins, which can only be sustained by selling shrink-wrap to a majority of customers.
Margins are likely to fall once prices are factored on a per-user basis.
As ASPs know, high margins are hard to sustain in a commodity market. And finally, there's service to consider. As we have pointed out in our newsletters, the key to ASP survival is service - which is not something Microsoft is renowned for. To be an effective ASP to end users, Microsoft will need to turn around its service record. Related links Senior Consultant Jeb Bolding is with Enterprise Management Associates in Boulder, Colo., an analyst and market research firm focusing exclusively on all aspects of enterprise management.