The Bloor Perspective: 3Com's strategy switch, the language of European ecommerce, and ASPs - what end users think

In the frenetic stock market of the Internet age, potential for growth is paramount. The ability to make and sell products to achieve a steady revenue stream is secondary. The high returns go to people who find investments that can grow overnight. Skilled IT workers are attracted to growth companies by stock options with the same appeal.

3Com wants to reinvent itself as a growth company, so out goes the modem business, out goes Palm, which contributed significantly to 3Com's cash pile through the public offering and out goes high-end networking. (See '3Com re-jig leads to sale of LAN and WAN assets' http://www.silicon.com/a36459 )

In the consumer market, 3Com will focus on broadband and wireless applications. The opposite side of the coin is an expansion of its offerings to service providers. With very rapid change in this market, 3Com sees significant opportunities for expansion. It already has a good position and stands to gain as the market grows.

Of greatest interest to the typical business buyer of technology is 3Com's development of its products targeted at small and medium-sized locations. To expand on its existing strengths, 3Com is announcing alliances with F5 for load balancing; Inktomi for Web-caching; and Sonic Wall for firewall capabilities.

The approach here is analogous to Compaq's moves into the small business sector. Great efforts are being made to create "appliances" that deliver complex technology in packaged form. The aim is to provide boxes whose functions can be readily understood and which can be easily installed without a requirement for technical skills. There is a substantial market for products that can deliver these values, both in small businesses and in the outposts of larger enterprises.

Given the healthy cash pile that 3Com has accumulated, the changes the company is making give it a good chance of achieving its goal of growth. Certainly the share price reacted positively to the news, but only time will tell how far the gains will extend.

* The multi-lingual European challenge *

One of the reasons Europe has lagged behind the USA in adopting ecommerce has been the multi-language/multi-cultural issue. The USA has been able to perform as a single market, but Europe remains fragmented despite the best efforts of the EU. The good news, though, is that any solution to these inter-Europe issues is likely to be a good match with the needs of global commerce - an issue yet to be addressed by the majority of the US market.

The first technology company that - to our knowledge - has realised the potential of this global market is Tridion.

Tridion's DialogServer product has a truly international appeal, but initial effort is being targeted towards the area of highest growth, which the company sees as spreading out from northwest Europe.

In essence, DialogServer enables the definition of a "blueprint" of the corporate Web site that encompasses content and brand management plus customer relationship management and integration with the application portfolio. This blueprint is defined and managed by the corporate head office staff, who also control the level of localisation possible. If required control can be cascaded through a number of levels of localisation.

For a new company, Tridion can already show an impressive list of customers and integration partners. This latter is probably the key to the future success of the company. It is extremely difficult for a new technology company to grow its own brand recognition, and in particular for a European vendor to make it to the big-time in the USA.

We would expect to see new competition emerge as the need to take an international stance becomes more obvious. However at this stage of the game it appears that Tridion has the most comprehensive product in what should become a significant growth area.

* ASPs: what the users think *

A recent Bloor Research survey is food for thought for anybody out there thinking that ASPs are just a short-lived opportunity for product placement. Conducted at last week's Bloor Research conference, "The USP of the ASP", the survey of delegates came up with some results which are, to say the least, illuminating.

Forty per cent of respondents claimed to be extremely likely to implement ASP services within five years, and 36 per cent were very likely.

Even though 76 per cent said that use of ASPs was inevitable, 57 per cent said it was unlikely that ASP use would replace existing IT, compared to 36 per cent that said this was likely.

The most likely applications for ASP was ecommerce and Web sites, followed by packaged applications. Only 23 per cent saw legacy applications as suitable candidates for ASP - this is a considerable shift of opinion from traditional outsourcing.

The main reason for ASP usage was seen as the ability to concentrate on the primary business mission - 95 per cent thought this was important. Greater scalability (93 per cent) was the second reason quoted, followed by reduced total cost of IT (91 per cent). Only 57 per cent thought that greater choice of applications was of any importance.

The most important feature of an ASP was seen as the ability to understand business requirements. This was followed closely by proven disaster recovery plans (91 per cent) and comprehensive service-level agreements (90 per cent).

Least important is platform compatibility with existing IT (43 per cent) and ability to accommodate entire application portfolio (31 per cent).

The main fears that the respondents held was the lack of ability to bring IT back inhouse if the ASP is unsuccessful (69 per cent), coupled with the loss of control of IT (57 per cent). These were followed by integration fears - with inhouse systems (59 per cent) and with business or supply chain partners (55 per cent).

** For more analysis, see http://www.it-director.com