THE WIRED INDEX
Larry Ellison, CEO of WIRX warhorse Oracle, once declared that his company's products would be leased to application service providers only over his dead body. Well, Ellison is still breathing, and today you can buy access to Oracle's financial and sales applications from dozens of ASPs (Portera Systems, for instance) for a monthly fee.
The ASP model is generating momentum – if not profits just yet – for a simple reason. With apps on tap, customers pay for what they need to use, not what the vendor needs to sell. They may ultimately spend more than the price of a traditional software license, but the cost correlates directly to value received.
ASPs also level the playing field for businesses: You don't need to be a corporate behemoth to afford best-of-breed apps, and you don't need to maintain a large IT department to manage them. Want to start an airline? Rent a reservation system with a comprehensive array of airline schedules. Add a few planes, pilots, and ticket agents, and you're set for takeoff.
Among WIRX companies, Microsoft is placing the biggest bets on the ASP model, and though the results are still inconclusive, BroadVision and i2 have wagers on the same horse. Intel, which is opening huge data-management centers, clearly expects the ASP model to pay off.
The real winner, though, is the economy as a whole. As CIOs become comfortable with outsourcing and kick their addiction to in-house IT, businesses will ride a new tide of productivity. Before long, managing your data on your own computers could seem as quaint as keeping all your money under the mattress.
– Phil Hood (phood@digital4sight.com)
INDEX PERFORMANCE (as of 10/1/00)
Name Since 11/30/95 Previous 12 mos. YTD
| WIRX | +445.02% | +46.44 % | +4.18 %
| Nasdaq Composite | +246.75 % | +33.74 % | -9.74 %
| Dow Jones Industrials | +109.89 % | +3.04 % | -7.36 %
The Wired Index tracks 40 public companies selected by editors of Wired to serve as a bellwether for the new economy. For a complete description and the latest results, see stocks.wired.com. Data courtesy Bloomberg Financial Markets.
| NEW MONEY
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