By Simon Hodgson
Oracle Corp expects to sign up between 30 and 40 European customers for its BusinessOnline application hosting service in the next six months, according to Oracle’s EMEA senior VP at Business OnLine Alistair Crawford. The US service has been running for six months, and Crawford wants to mirror the US growth rate.
The slower take-up of application service provider services by European firms is reinforced by another ASP, Gateshead, UK-based Quality Software Products Holding Plc. It has moved in the opposite way, offering a full rented ASP service in the US where it only offered a managed service option for customers which had already invested in its software in the UK.
Crawford referred to a meeting of minds earlier this month between Gates, McNealy and Ellison, where the three CEOs concurred that applications would increasingly be rented rather than purchased outright. Oracle is still some distance from that state, as its BusinessOnline means customers have to buy hardware and software, but Crawford concedes that the market may force Oracle into the rental model as quickly as 18 months time.
Oracle’s current stage can be seen as a halfway-house enabling the Redwood Shores, California-based firm to acclimatize to the ASP model itself, while introducing a conservative mid-market to the new way of buying applications.
Although there are questions about how the revenue stream would be affected by a monthly payment rather than big contracts, Crawford said that, theoretically, a rented service could only be beneficial. It would target a massive sector of firms too small to afford the $100,000 to $250,000 per year costs of BusinessOnline, and therefore provide new revenue.
Larry Ellison, speaking at the launch of Business OnLine in New York, said that within three or four years, Oracle’s ASP element could be providing up to 50% of the company’s total revenue. Crawford concurred with that estimate for the European market, adding that the 50% would include a minimum of 10% net new business. Both expect that firms currently paying Oracle license revenues will change to subscribing to a monthly or yearly bill.
