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Web-hosting company ventures into volatile ASP market

HostPro, the services division of PC maker Micron Electronics, unveils a messaging service geared toward small and midsized businesses.

    Despite fluctuations in the nascent application-hosting sector, HostPro, the services division of PC maker Micron Electronics, is making its debut.

    The Los Angeles-based company on Tuesday unveiled its first hosted-application offering, geared toward small and midsized businesses--companies that typically don't have the resources or the capital to afford and manage enterprise-level software.

    The company's new hosted-application service, dubbed HostPro Advanced Messaging, rents Microsoft's Outlook and Exchange Server 2000. The messaging service is available now, starting at a monthly subscription price of $19.95 per mailbox, with no base fee. Eventually, HostPro said, it will charge companies $24.95 monthly per mailbox for the service and a one-time set-up fee of less than $100 per customer.

    "This is the first of many applications we'll offer as an ASP (application services provider)," said a HostPro spokeswoman. The company is looking to provide primarily back-office applications for rent.

    HostPro, which already offers Web-hosting services, is jumping into a market that is in a state of change and consolidation, with many players rushing to fine-tune their business models and crystallize plans to achieve profitability.

    Though a wide range of technology giants, from Oracle to IBM to AT&T, have been pushing their ASP strategies, a number of entrants have had a difficult time increasing customer adoption of the novel service. And, while services have gotten a big push from many technology providers, including HostPro's parent company, Micron, customers have been slow to latch on to the concept.

    Some ASPs, especially newcomers, have even gone out of business. Upstart Red Gorilla abruptly ditched its clients last fall after it failed to secure additional funding to stay afloat. In December, HotOffice.com went out of business because of harsh market conditions. Struggling business management software maker J.D. Edwards also recently exited the ASP game, not even a year after it launched its own ASP division.

    Still, analysts project a very lucrative market ahead. Market researcher Gartner predicts the worldwide ASP market will reach more than $25.3 billion by 2004.

    HostPro, which owns and operates several data centers, said its new ASP offering includes such services as around-the-clock customer service and support, virus protection and server backup.

    Despite gloomy earnings news from Micron recently, the company said it intends to continue its expansion into services and Web hosting. Net revenue in its HostPro division services grew to $14 million last quarter, a 19 percent jump from the previous quarter. Micron at the time also said further acquisitions in the services area are likely.