Can an ISP Eat an xSP's Lunch?

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.

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.

» posted by ITworld staff

ITworld

Sign up for ITworld's Daily newsletter
Follow ITworld on Twitter @IT_world

• Email
• Print
• Share
  • Slashdot
  • Digg
  • Stumble
  • Reddit
  • Newsvine