The Bloor Perspective: ASP action; B2B ecommerce hubs; and Cisco: worth more than Microsoft

This week has seen announcements from both Qwest Communications in the USA and KPNQwest in Europe positioning the two companies as frontrunners in the ASP infrastructure provision market.

KPNQwest is the number two European ISP formed by the coming together of the Dutch Telecommunications company KPN and Qwest Communications from the USA. Qwest Communications is itself in the process of merging with US West, resulting in the direct connection of Qwest's network to that of US West.

Both Quest Communications and KPNQwest are providers of broadband fibre optic communications services. KPNQwest is to create a set of six interconnecting "EuroRings" to join up all the major business centres across Europe, with two already in place and a third under construction. The US Qwest Communications operation claims more bandwidth than AT&T, Sprint and MCI Worldcom combined. The company is embarking on connecting this US capacity to Japan and the European network.

It is this communications backbone that differentiates the ASP announcements from the run of the mill. In the USA Qwest Communications has announced an agreement with IBM to jointly invest $5bn in building 28 "CyberCenters" at strategic points across the USA. Meanwhile in Europe KPNQwest already has 12 CyberCentres and is in the process of constructing a number of "mega-CyberCentres" of more than 10,000 square metres each.

Each of these centres is positioned directly on the broadband communications network, so that the company is in a position to offer an end-to-end service guarantee. The centres are being constructed with all of the physical security features that would be expected. On top of this framework we expect a whole series of partnerships and business relationships, the first of which involves Open Text. Open Text's ASP service will be based around the LiveLink collaborative working solution. LiveLink provides a set of features for building intranets, extranets or ebusiness solutions. The native features include document management, workflow and business process automation, and there are modules to interface with other applications such as SAP R/3 (which Open Text describes as a "legacy application").

On its own this ASP service looks like one of many. As mentioned, though, the differentiator is the ability to guarantee available bandwidth to the edge of the KPNQwest network. For a service-critical environment this is a killer capability. This formula raises the bar for ASP services, and makes it increasingly unlikely that low-budget start-ups will succeed.

** Commerce One going for world domination? **

Hardly a week goes by without a new announcement from Commerce One of an agreement to build a trade portal for another industry sector or a new partnership with a vendor of complementary technology. Some of these are relatively small affairs, significant to the particular industry but hardly earth-shattering. But the cumulative effect is starting to position Commerce One at the centre of B2B ecommerce.

This week saw two announcements from Commerce One, the first concerning a new partnership agreement with PeopleSoft, which will see the creation of trading communities incorporating Commerce One's B2B portal technology and PeopleSoft's ebusiness applications. This should give PeopleSoft an improved capability to compete head-to-head with SAP, while it provides Commerce One with the ability to offer fully integrated applications. A win-win for the two companies, as partnerships have to be - but there is little doubt that it is Commerce One in the driving seat.

The second announcement was the formation of a new ecommerce trading exchange for the aerospace and defence industry, which brings together many of the biggest names in the industry: Boeing, BEA Systems, Lockheed Martin and Raytheon, which coincidentally own $71bn of purchasing power.

The trend is now clear - industry groups are realising it is in the interest of the whole industry to co-operate in creating a single marketplace, with all of the efficiencies that this will bring. We expect all major industries to move in this direction. Provided that the early implementations are successful, it is also more than likely that further initiatives use the technologies and partners that have shown to be effective.

This has enormous consequences for Commerce One. We could see the position arising where a significant portion of world trade passes through a B2B portal that has some element of Commerce One involvement. If the company plays its cards absolutely correctly it has the potential of becoming the "Big Blue" of B2B trading.

** Little Cis hits the top **

Cisco's market valuation rose this week to $555bn, overtaking Microsoft which fell to $541bn. That really is quite a coup. Cisco has, in a way, been the little sister in what is a very rich family. Certain companies caught the technology wave of the 80s and 90s and left their compatriots behind. Here we are not talking about the Oracles and Suns, although such companies have done exceedingly well in their own areas.

There are a handful of firms which have become the de facto standard, and they have done it globally. These are Microsoft, Intel and, well, Cisco. The former two grabbed the limelight, leaving little attention for Cisco outside networking circles.

While it is easy to spot why Microsoft and Intel did so well, riding on the back of an IBM PC clone that undercut the young and arrogant Apple, the picture for Cisco is more hazy. It has grown its market share by continually developing its products and moving with the flow. Unlike most other networking companies, it has not grown through mergers. It has favoured stringing acquisitions of smaller companies instead, buying key technologies and expertise rather than direct market share. This strategy has clearly worked.

What is perhaps most remarkable is that Cisco has grown into a leader not only in networking but in telecommunications, a market which is not known for sharing business. The company's technology-agnostic stance is a key driver to this: the problem to be solved may be the unrelenting growth of the Internet, but the solutions are legion - be it LAN or WAN, the best technology wins and no option is ruled out, be it ATM, frame relay, xDSL, or Ethernet to name a few. This approach has kept the company flexible, enabling it to grow into new markets through its reputation in networking. As the world goes IP, the world is choosing Cisco.

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