The real promise of application services is freedom. So far, providers have focused on liberating their customers from the burden of maintaining an information technology staff. Now, the wireless revolution under way in the hosted applications business aims to free the data itself from the tyranny of the browser.
"It boils down to practicality and convenience -- you've got to weave in access from mobile devices for the real road warriors," says Dave McNamara, vice president of sales and marketing at Neteos, a Waltham, application service provider (ASP) that hosts its own customer relationship management applications. Neteos is due to introduce wireless access for handheld devices from Palm today.
Wireless access to business applications via Neteos' eRMNow! service extends the reach of the company's small and midsized customers, says Director of Marketing Thom VanHorn. "The beauty of mobile access is that it pushes out to the front lines, so that a service or salesperson on a call has immediate and accurate information," he says. Neteos, which last month received US$6 million in first-round funding, won't charge extra for its wireless services.
The wireless ASP business is still in its formative stages, but it's already drawing a crowd -- from the new Cable & Wireless a-Services unit, a recently launched in partnership with Microsoft and Compaq Computer, to Oracle's wireless unit, OracleMobile, and a host of US and international wireless pure plays. "Mobile commerce will happen quickly in Europe and Latin America, where the technology is more advanced," says Hakan Wretsell, chief executive of Mobilestop.com, a Miami company that hosts e-commerce applications for wireless devices, including a recently announced deal to provide commerce services for Ericsson in Brazil.
A report issued earlier this month by International Data Corp. analyst Charul Vyas says that the wireless ASP market will see compound annual growth of more than 100 percent in the next few years. It will go from pretty much nothing now to US$732 million in revenue by 2004 -- that precise number aside, all ASP estimates are probably best understood as metaphorical ways of saying "big".
The wireless devices themselves are generally not ready for prime time, Vyas says, but should improve to meet demand.
Poor interfaces and connection speeds aren't much of a problem, though, until people actually start using the services. "Today, perception of the wireless ASP idea is high, and everybody expects it to come. It's sexy," says Mike Giles, chief technology officer at Campbell, ASP Portera Systems. "How usable it is remains to be seen. So far, it's more a case of wanting than needing."
Not that Portera is sitting on the sidelines. The company, which has more than 170 customers in the professional services industry, is taking the wireless wave seriously. "A good consultant is one that's out of the office all the time, so they are ripe for this," Giles says. "This is a big push for us."
Outsource option
Portera, which hosts front- and back-office software, including financial applications from Oracle, had to decide whether to develop its own wireless capabilities or purchase middleware to get up to speed. "It was a big question for us, but we decided that it's not our core competency," Giles says. "All of those wireless devices potentially have different protocols, and it makes more sense to buy a mobile device server than to try to keep up on our own. It's very early days, and middleware protects us from change." Portera will announce a contract with a middleware vendor this fall.
"We'll start with a subset of capabilities, things like alerts and approvals," Giles says. "You won't be downloading documents on your phone for a while, especially given the cumbersome nature of most devices." Personal digital assistant devices will drive the first wave of mobile services, he says. IDC's Vyas says that successful ASPs will eventually need to serve numerous types of devices to capture enterprise customers. "Not everyone has the latest Palm," she says.
For Kurant, a San Francisco company that enables Internet service providers to become ASPs, adding wireless functionality to the next release of its StoreSense product is seen as a way to keep up with the market, but not necessarily as a driver of business. "We're hearing a demand from some of our ISPs, plus some skepticism about how extensive the use of it will be," says CEO Curtis Pierce.
