By Jo Maitland and Stephen Phillips
As expected, Nortel Networks Corp announced its first foray into the application service provider (ASP) arena yesterday, teaming up with Hewlett-Packard Co and three software partners to offer tailored applications to ASPs targeting the small-to-medium business market.
As ComputerWire revealed earlier this month, the Canadian communications equipment giant confirmed it has amassed a 1000- strong ASP business unit to target the burgeoning market for hosted applications. It said bundles of its hardware with packaged applications and systems management software from Hewlett Packard will be available to service providers by mid- first quarter 2000. Beta testing is underway but the company declined to offer details on the trials until next year.
Richard Caruso, president of Nortel’s newly-formed Application Service Provider and Carrier Group, said the deal will offer ASPs significant time-to-market and economic advantages over other market offerings, adding that no other relationship today combines such a complete offering.
Lucent Technologies Inc and Sun Microsystems Inc recently inked a deal to cross-market and sell each other’s technologies into the service provider space. But Caruso described the deal as a loose coupling of partners, adding that Nortel’s offering goes much deeper than that by actually working with the ASPs to help them integrate the products and software. He added that integration is what ASPs are currently struggling with the most.
As part of the announcement, Nortel said it has partnered with Software.com Inc, Concur Technologies Inc and Intershop Communications Inc to offer those companies’ applications on a hosted basis. Surprisingly, there was no reference to Nortel’s $2.1bn acquisition of Clarify Inc, whose suite of front office customer relationship management applications would lend themselves very easily to the ASP model. Nortel refused to comment on how Clarify might be brought into the initiative, citing legal reasons for not discussing Clarify’s prospects. Analysts were bemused by the deal at the time of the acquisition and still do not understand what Nortel intends to do with such a comprehensive suite of front office applications.
Nortel said it will market Software.com’s InterMail’s messaging application, managed by HP’s Smart Internet Messaging Suite, as its Managed Messaging offering. By mid-2000, Nortel intends to scale-up this offering by integrating its CallPilot unified messaging technology with Software.com’s messaging server.
Nortel said it would market Intershop’s software under the heading of Managed eCommerce, where Intershop’s product will be used to create and manage web storefronts for small and medium businesses. Concur Technologies’ product will form the core of its Managed Workplace eCommerce, providing web-based workplace software including travel and expense management, human resources and corporate procurement. The Concur eWorkplace business portal will be distributed through ASPs and hosted by Concur or the service provider.
A second wave of the initiative, planned for mid 2000, will see Nortel announce more partners in the areas of managed call centers, managed desktops and collaboration services like multimedia conferencing. At that time, the company intends to open up access of its APIs to the rest of the software market.
Nortel said it will offer the service to ASPs on HP’s 9000 series of servers and storage systems, in conjunction with HP’s e- Services Solution organization, a business unit comprising 2,500 people. The three software applications will be managed by Nortel’s Preside service-enabling software, over its IP/VPN products at the subscriber edge of the network. To deploy the applications, the ASP will need to have both the Shasta managed router/firewall product from Nortel and its Contivity IP/VPN switch. HP and Nortel are working on tying together their management platforms, OpenView and Preside, to enable ASPs to offer guaranteed services from the network level through to the applications running on it. This is not expected until late into the first quarter of 2000.
Nortel would not comment on potential revenue streams from this new business but referred instead to Dataquest figures that estimate the ASP market will be worth $23bn by 2003. The company was also candid about its pricing structure. Whether or not it will charge a one-off fee for setting up the service (hardware and software) for the ASP or take a cut of the monthly revenues – in keeping with the ASP way of charging – is still not clear. More details are expected over the coming weeks.
