AT&T's Ecosystem

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Event Summary

During ComNet 2000, AT&T announced "Ecosystem for ASP's." It is a network service platform that will enable Application Service Providers to deliver high performance, network-based applications. Building on its existing Internet assets, AT&T also introduced "intelligent content distribution" and "enterprise storage services" as elements of the new platform.

The hosted applications will reside in AT&T's network and help businesses eliminate the overhead associated with managing software applications. The applications range from packages for small and mid-sized businesses up to enterprise-wide manufacturing and supply chain management applications.

AT&T is also offering a co-marketing program that will allow ASPs to leverage the power of AT&T's brand through multiple levels of co-marketing support. Additionally, qualified ASPs will be able to market and promote a broad range of AT&T Internet services in their offers.

AT&T is making a $250 million investment in infrastructure enhancements to provide an environment suitable for remote application support. Initiatives include:

Partnerships: Through partnerships with Sun Microsystems, Cisco Systems and Hewlett-Packard , AT&T is implementing the technology to create and support the Ecosystem.

Intelligent Content Distribution: AT&T labs with InfoLibria, Inktomi and Novell will contribute to accelerate website performance, through caching and optimal server selection. Additional benefits will include improved reliability, scalability and reduction of single point of failure vulnerabilities.

Enterprise Storage Services: Working with StorageNetworks and EMC to deliver managed enterprise storage systems, networks and software solutions.

Facilities for Application Testing: Sun Competency Centers will be available to ASP's for benchmarking, tuning, sizing, capacity-planning and testing of applications.

The AT&T Ecosystem for ASPs is built on a core set of data and IP infrastructure resources:

AT&T data centers (26 planned for hosting and co-location services.)

OC-48/OC-192 IP backbone.

A portfolio of broadband services including DSL

VPN offers

Design and implementation professional services.

Monitoring and management services.

Market Impact

This announcement represents a significant endorsement of the ASP model. In August 1999, IDC reported spending in the ASP space could reach 2 billion by 2003. In October 1999, Dataquest predicted the entire ASP market would reach 22.7 billion by 2003. While groups attempt to define the size and evolution of the market, one message is clear; the Application Service Provider market is growing.

AT&T's endorsement and development of an "Ecosystem" identifies a new opportunity for the company and its partners. Most ASPs are focusing on refining their offerings, creating application support centers and managing bandwidth issues. AT&T's focus is the creation of a network that is the environment for business. The value proposition will be a reliable, stable and secure IT infrastructure for delivering e-services capable of handling heavy volumes of transactions.

AT&T's collection of impressive partners and a robust technical architecture make this an attractive proposition. If the Ecosystem is successful, expect to see other communication giants support similar efforts.

According to Kathleen Early, President of AT&T's Data and Internet Services, the Co-marketing program will be available Q1 of 2000 and the build out of the 26 data centers is ahead of schedule.

User Recommendations

ASP Companies:

This is an attractive proposition. New and existing ASPs should evaluate AT&T's offer. At the very least use the Ecosystem "blueprint" as a measure of existing IT infrastructures. Perhaps similar services and benefits can be garnered from existing partnerships. Additional considerations are:

1. What applications are best suited for this infrastructure?

2. Are the OC-48 and/or OC-192 "pipes" available for use today?

3. If caching is used to improve content distribution, how is it done over a VPN?

End Users considering an ASP solution:

Determine if remotely hosted applications suit your business needs. Factors such as cost, security, availability, back-ups, redundancy, performance and company viability should be on the top of your list. If you've decided the ASP solution is a best fit, consider AT&Ts architecture and services in the evaluation of potential Application Service Providers.


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