Sybase and Oracle at odds over ASP model

NEWS Application service provision will not play a significant part in database giant Sybase's future plans because the model is fundamentally flawed. The claim was made by Sybase CEO John Chen during this week's Techwave conference in Florida, and contrasts sharply with the opinion of arch-rival Oracle, which believes it will make considerable revenues from its involvement with the 'apps-on-tap' movement. Tim Payne, head of data server marketing at Oracle, told silicon.com earlier this week: "Oracle expects to see 50 per cent of new business coming via the ASP model within two to three years." But Chen said the ASP model overlooked the crucial fact that most customers are reluctant to give up control of their internal IT systems to a third party, and - unlike other internet companies - ASPs have little opportunity to earn revenue from online advertising. "Very few customers are willing to let go of internal systems. People don't want ASPs to manage their applications, they just want a maintenance service. You can't charge much for that," he said. However, Sybase recently finalised an ASP agreement with Cable & Wireless in Hong Kong to deliver applications to companies operating in the financial field. Despite his anti-ASP stance, Chen said the deal had been a sensible move because it opened up a market of one billion people to the company. "It helped to expand our channels. It cannot be just us going around the world, one country at a time. That's just not sustainable. To be successful we need channel partners," he said. Alan Lawson, research analyst with the Butler Group, backed Sybase's approach. He believes ASPs will have problems with customer volume and pricing structures. He said the current popularity for the ASP model was fueled by the same industry hype that sparked the initial dot-com explosion. "There are a lot of companies rushing into the market, just like they did in ecommerce. They think they have to be seen to be doing something. But they'll all disappear in a similar fashion to dot-coms," he said.