IDC: Service provider revenue to hit US$400 billion

The service provider market that today consists mainly of ASPs (application service providers) and NSPs (network service providers, will expand to become a US$400 billion industry by 2004 from $115 billion last year, an industry analyst said Wednesday.

The ASP market alone is currently worth $1 billion, far above the $800 million [M] that International Data Corp. (IDC) had originally predicted, said Clare Gillan, group vice president, new business initiatives for International Data Corp. in Framingham, Mass.

“ASPs emerged because they sensed that something was changing, but a lot of them rushed to market with very little preparation,” she said, speaking at the IDC Directions 2001 conference here.

One of the things they weren’t prepared for was billing. “Lots of xSPs were charging on a service-fee basis, but most ASPs and their partners hadn’t even figured out how to bill for them,” Gillan said.

Revenue for companies that sell infrastructure equipment to xSPs, including server and storage providers, will grow from $52 billion in 2000 to $130 billion in 2004, she added.

Currently, the largest flavour of xSP are the NSPs (network service provider), which includes companies like Level 3 Communications Inc. “The majority of revenue in the market today is network service provider revenue,” Gillan said. NSPs make up an $80 billion market today, and will grow to $300 billion in 2004, retaining the lion’s share among service providers.

Other types of service providers making ground include DESPs (development environment service providers), CSPs (content service providers) and PSPs (process support service providers), to name a few. As the xSP market grows, “the risks are getting fewer and the (reward) is getting larger,” Gillan said.

IDC is a subsidiary of International Data Group Inc., the parent company of IDG News Service.

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