Compaq Computer Corp and Cable & Wireless Plc have formed a global partnership to offer e-business systems to the SME market. They are putting $500m over the next five years into the joint venture that will establish C&W as an application service provider while opening a market for Compaq to provide hardware, software and consulting services.
Grabbing a share of a market that Forrester Research estimates will be worth $10.1bn by 2001 is essential for two companies that are badly in need of new sources of revenue.
Full details of what packages will be on offer are not yet available and the two companies are guarded on how they will split revenue. But applications will be hosted on Compaq hardware at C&W datacenters and offered to customers on C&WÆs IP network.
The new service will roll out next year, in the US and Europe at the beginning, and be extended to Asia Pacific in the following twelve months. While initially targeted at SMEs, not least because they donÆt have IT directors or CIOs defending their turf, it will eventually be offered to multinationals.
For C&W, whose under-performing share price has made it a tempting takeover target, moving into the ASP business offers an opportunity to squeeze more revenue from its network, while offering a new range of customers a package of applications and telecommunications services.
Compaq will not only benefit from high-end server sales and storage architecture to the data centers, but will also be able to supply access devices, from PCs to wireless handheld devices, directly to clients without losing margin to channel partners. It was, however, at pains to say there would be no conflict with its partners. By offering a total package to customers, it believes it can give a boost to its NonStop e-business consulting and professional services.
The agreement is not exclusive and, given the early stage of the development of what will be an intensively competitive ASP market, both companies are likely to develop other alliances.
