Encyclopedia of Computer Science and Technology

application service provider 21Petzold, Charles. Programming Windows: the Definitive Guide to theWin32 API. 5th ed. Redmond, Wash.: Microsoft Press, 1999.“Windows API Guide.” Available online. URL: http://www.vbapi.com/. Accessed April 12, 2007.application service provider (ASP)Traditionally, software applications such as office suites aresold as packages that are installed and reside on the user’scomputer. Starting in the mid-1990s, however, the idea ofoffering users access to software from a central repositoryattracted considerable interest. An application service provider(ASP) essentially rents access to software.Renting software rather than purchasing it outright hasseveral advantages. Since the software resides on the provider’sserver, there is no need to update numerous desktopinstallations every time a new version of the software (or a“patch” to fix some problem) is released. The need to shipphysical CDs or DVDs is also eliminated, as is the risk ofsoftware piracy (unauthorized copying). Users may be ableto more efficiently budget their software expenses, sincethey will not have to come up with large periodic expensesfor upgrades. The software provider, in turn, also receives asteady income stream rather than “surges” around the timeof each new software release.For traditional software manufacturers, the main concernis determining whether the revenue obtained by providingits software as a service (directly or through a thirdparty) is greater than what would have been obtained byselling the software to the same market. (It is also possibleto take a hybrid approach, where software is still sold, butusers are offered additional features online. Microsoft hasexperimented with this approach with its Microsoft OfficeLive and other products.)Renting software also has potential disadvantages. Theuser is dependent on the reliability of the provider’s serversand networking facilities. If the provider’s service is down,then the user’s work flow and even access to critical datamay be interrupted. Further, sensitive data that resides on aprovider’s system may be at risk from hackers or industrialspies. Finally, the user may not have as much control overthe deployment and integration of software as would beprovided by outright purchase.The ASP market was a hot topic in the late 1990s, andsome pundits predicted that the ASP model would eventuallysupplant the traditional retail channel for mainstreamsoftware. This did not happen, and more than a thousandASPs were among the casualties of the “dot-com crash” ofthe early 2000s. However, ASP activity has been steadier ifless spectacular in niche markets, where it offers more economicalaccess to expensive specialized software for applicationssuch as customer relationship management, supplychain management, and e-commerce related services—forexample, Salesforce.com. The growing importance of such“software as a service” business models can be seen inrecent offerings from traditional software companies suchas SAS. By 2004, worldwide spending for “on demand”software had exceeded $4 billion, and Gartner Researchhas predicted that in the second half of the decade abouta third of all software will be obtained as a service ratherthan purchased.Web-Based Applications and Free SoftwareBy that time a new type of application service providerhad become increasingly important. Rather than seekingto gain revenue by selling online access to software, thisnew kind of ASP provides the software for free. A strikingexample is Google Pack, a free software suite offered by thesearch giant (see Google). Google Pack includes a varietyof applications, including a photo organizer and search andmapping tools developed by Google, as well as third-partyprograms such as the Mozilla Firefox Web browser, Real-Player media player, the Skype Internet phone service (seevoip), and antivirus and antispyware programs. The softwareis integrated into the user’s Windows desktop, providingfast index and retrieval of files from the hard drive.(Critics have raised concerns about the potential violationof privacy or misuse of data, especially with regard to a“share across computers” feature that stores data about userfiles on Google’s servers.) America Online has also begun toprovide free access to software that was formerly availableonly to paid subscribers.This use of free software as a way to attract users toadvertising-based sites and services could pose a majorthreat to companies such as Microsoft that rely on softwareas their main source of revenue. In 2006 Google unveileda Google Docs & Spreadsheets, a program that allowsusers to create and share word-processing documents andspreadsheets over the Web. Such offerings, together withfree open-source software such as Open Office.org, mayforce traditional software companies to find a new modelfor their own offerings.Microsoft in turn has launched Office Live, a servicedesigned to provide small offices with a Web presence andproductivity tools. The free “basic” level of the service isadvertising supported, and expanded versions are availablefor a modest monthly fee. The program also has featuresthat are integrated with Office 2007, thus suggesting anattempt to use free or low-cost online services to add valueto the existing stand-alone product line.By 2008 the term cloud computing had become a popularway to describe software provided from a central Internetsite that could be accessed by the user through any formof computer and connection. An advantage touted for thisapproach is that the user need not be concerned with wheredata is stored or the need to make backups, which arehandled seamlessly.Further ReadingChen, Anne. “Office Live Makes Online Presence Known.” eWeek,November 2, 2006. Available online. URL: http://www.eweek.com/article2/0,1759,2050580,00.asp. Accessed May 22, 2007.Focacci, Luisa, Robert J. Mockler, and Marc E. Gartenfeld. ApplicationService Providers in Business. New York: Haworth,2005.Garretson, Rob. “The ASP Reincarnation: The Application ServiceProvider Name Dies Out, but the Concept Lives onamong Second-Generation Companies Offering Software asa service.” Network World, August 29, 2005. Available online.