The buzz is growing louder on application service providers. Wall Street is beginning to take notice and is initiating coverage of some of the companies that are the big fish in what remains a small pond. In other words, as Usinternetworking, Annapolis, Md., extends its customer base, he said, its profit margins will expand. The key to that will be widespread acceptance of the ASP concept by businesses. Another possible roadblock on the ASPs' path is delay in deploying broadband infrastructure, which would harm software performance on a network.
Some analysts also foresee a shakeout among ASPs.
A Gartner Group study predicts that 60 percent of the 480 retail ASPs now existing will vanish by the end of 2001. Stricker said it's too early to tell if a shakeout really will develop, but if it does, it could add to the market share of the leading companies. Investors would do well to concentrate on those companies that solve the most business problems, he added.