The Analyst's Corner: Debabelizing the ASP market: A short glossary for the chronically confused

There must be a better way for new companies to rise above the masses than creating yet another new acronym for the same old thing

As analysts, part of our job is to help clarify emerging markets. This entails defining market segments, categorizing companies and attempting to describe emerging market trends. Sometimes—though—we find ourselves in the middle of companies’ marketing messages.

From Amazon.com

In an attempt to differentiate a company from its closest competitors, a team of marketing and public relations people will create a new acronym to describe what the company does. There are so acronyms floating around the high technology market that it put the government to shame.

The only way to explain this phenomenon is to say that technology markets have an adolescent, rebellious stage where companies try to be as different as possible, even though they are all the same. 

DSL: A Recent Offender

In the past few years, digital subscriber line (DSL) technologies and services have been a major topic of discussion in the technical community. Because DSL technologies work in the public telephone network, standards were developed alongside the technologies. As this happened, we ended up with a whole host of different standards for different types of traffic running over various physical networks. 

For each standard, there were two- and four-wire variants that resolved some of the key issues about distance from the central office, line quality and such. Here is some of the alphabet soup that resulted from this buzz:

IDSL  ISDN DSL	Effectively, 128K ISDN service—this approach was one of the first services to be called DSL.
ADSL Asymmetric DSL	A technology designed for consumer Internet access with faster download speeds than upload.
SDSL Symmetric DSL	A T-1 replacement technology with equal upload/download speeds.
HDSL High-speed DSL	DSL at speeds greater than DS-1.
VDSL  Very High-Speed DSL	DSL that approaches Ethernet speeds
G.Lite	A standardized ADSL variant designed for splitterless, two- wire installations in residential applications.

With such a proliferation of acronyms, the industry got wise and finally created the generic term “xDSL” to encompass the range of different technologies. The funny thing about DSL is that its primary competitor—cable modems—never got an acronym.

Of course, once we had DSL, we needed service companies to sell DSL services. While the incumbent telcos [a.k.a. regional Bell operating companies (RBOCs) and Incumbent local exchange carriers (ILEC)] were selling DSL services, a new breed of communications companies emerged. While these new companies were competing with the ILECs, they were not selling voice services, a realm belonging to the competitive local exchange carriers (CLECs), hence the new moniker “DLEC” (data local exchange carrier).

The Service Provider Phenomenon

Meanwhile, the growth of the Internet in the mid-1990s created another type of company: the Internet service provider (ISP). ISPs have been long differentiated from traditional telecommunications companies in that they provide Internet services—e-mail, file transfer protocol (FTP), web hosting, Usenet news and web browsing.

While the concept of an ISP was fresh in our minds, the acronym has several spin-offs, including:

• NSP (Network service provider)
  To identify the wholesale Internet backbone providers who live in a world of peering, transit and BGP. These companies don’t provide retail services.
• WSP (Wireless service provider)
  A marketing person at a mobile/cellular/PCS telephone company decided to hop on the bandwagon.
• WSP (2) (Wholesale service provider)
  Some sick analyst firm decided that we didn’t have enough acronyms and that “NSP” wasn’t helpful enough.

And finally:

• ASP (Application service provider)
  To identify service companies whose primary business is in delivering hosted applications and enterprise-class IT services.

More than all things to all people

Our focus is the ASP market, and over the past three years, we’ve been watching some of the new acronyms in this space. At least once a week, we get a pitch from a company who puts us in our place. The conversation often goes like something like this:

COMPANY XYZ
“Just so that you understand, we are NOT an ASP. ASP is about delivering access to software over the Internet. We do not do that. We provide (fill in any random acronym)  services to mid-market companies.”

BART & DAN
“But do you deliver some form of software as a service?”

COMPANY XYZ
“Yes.”

BART & DAN
“Okay, so our terms may differ, but you do what we define as application services?”

COMPANY XYZ
“But we’re not an ASP.”

BART & DAN
“Riiiiggghhht. We understand. You do what ASPs do, but you’re different.”

Service providers are our life, and they’re like kids to us—we love them all the same, and they’re all different in our books—regardless of what they want to call themselves. Here are some of the new acronyms that they’ve created for themselves:

• IBS (Internet business services)
  An acronym designed to articulate the different between branded applications and branded services—where the service brand is the most important. We believe strongly in the underlying concept, but extraneous acronyms are cumbersome in our daily life.
• AIP (Application infrastructure provider)
  We commend Cisco for coming up with a term to describe the Web hosting business as it applies to ASPs. Because most web hosting companies are not providing the software infrastructure for ASPs, a new breed of companies are emerging to make this a reality. While we advocate fewer acronyms, the AIP term is quite useful.
• CSP (Commerce service provider)
  A commerce exchange service that provides hosted e-commerce applications. We’d call this an ASP by any other name, but the e-commerce companies just have to be different.
• VASP (Voice application service provider)
  An ASP that provides telephony, Centrex, messaging and other traditional “enhanced” services in an IP environment–not to be confused with “telco” or “CLEC.”

Basically, we roll all the reluctant ASPs into a single term:

• ClosetASP
  This is our acronym for describing all the ASPs whose marketing determines that they cannot be publicly identified as an ASP.

We’re hoping that one day (possibly soon) we can use a single acronym to describe all of these companies. From our point of view, all services delivered on networks are based on software. We know the names of some of this software, other software is anonymous…like voice mail. Whether it’s commerce, telephony or office apps, we’re betting that the market will come around.

For now, we like the acronym “xSP” to describe every type of communications and IT service company there is. Like teenagers going through a “phase,” we’ll continue to humor every company with a new acronym, but don’t wait for us to start using them—it’s way too confusing.
Dan Taylor and Barton Taylor are Analysts at Giotto Perspectives, Boston, MA.
This column originally appeared on the internetTelephony.com website.

Visit the Giotto Perspectives website.

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