ISPs are taking aim at the xSP market. Spurred by growing customer demand for services formerly considered exclusive to the xSP heavyweights, ISPs may have what it takes to be competitors in delivering xSP services.

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The rapid decompression of the dot-com market has sent many xSPs retreating from the small-and medium-enterprise (SME) market. Furthermore, the collapse of companies like Cameron Chell's cMeRun has left few, if any, xSPs focusing on the personal productivity market. Existing ISPs retain the most important resource necessary for moving into this vacuum, customers.

Recent research examining the ISP market for xSP services suggests that ISPs are planning to add the necessary features to compete in the SME and personal productivity markets. A recent report entitled "ISP to xSP: Putting the Service in Service Provider" suggests that ISPs have begun witnessing strengthening demand for extensive services beyond core offerings such as Web hosting. The services being considered include, management services, security services, Web casting, and expanded network services. For traditional Net and Web based service providers, the heat may be on.

Tom McCafferty, Managing Partner of ISP-Market, LLC told xSP Trends, "The message is clear, ISPs are going to be doing this with or without the traditional xSPs and if they want to stay in the game, [then] they need to examine their relationships with the ISPs that are out there." McCafferty went on to say that some 60% of ISPs are offering, or plan to offer, monitoring and reporting services for networks, applications, and security. Additionally, 25% of ISPs will deploy and implement security technologies while 15% will be adding some form of storage service.

ISPs moving in this direction will have the advantage of being more than just a channel. They can add service value through their recognized brands by acting as an already familiar marketplace for IT outsourcing. Many wary SMEs and individuals will be drawn to the traditional ISP roles and migrated to a wider menu of services. Provided the ISP has the right matrix of front-and back-office capabilities, partnerships with xSPs could provide more enterprise- specific, tailored solutions.

Typical ISPs will need some work to accomplishing these ends. Making these types of services available in a robust and dependable manner requires more dedication to customer and technical support capabilities, but their already formidable experience with the one to many business model will stand them in good stead.

In the xSP ecosystem, as with all ecosystems, when one approach recedes another emerges stronger and more capable. This may be the dawning of more than a channel; it may be the beginning of a new role for ISPs. Hopefully one that will reinvigorates the xSP business model.