Big names jump on app rental bandwagon

Big names jump on app rental bandwagon

Hardware makers are joining the horde of vendors betting that future users will increasinglay want to rent rather than own many core applications. But there's little sign yet that users, especially larger ones, have started doing that in any widespread manner.

That isn't stopping a growing number of vendors -- including Internet service providers, telecommunications companies, application hosting services and hardware sellers -- from taking advantage of Internet and browser-based application access technologies to pitch hosting services.

"It is like a utility model, where you can get an application for a certain transaction fee," said Gopi Bala, an analyst at The Yankee Group in Boston.

The latest to stake out the market are hardware vendors like IBM, Sun Microsystems and Hewlett-Packard, which are rushing to market technologies and programs that let service providers offer services that range from basic e-mail and Web hosting to network management outsourcing and enterprise application hosting via the Internet. Currently, the greatest use appears to be in outsourcing the hosting and management of e-commerce sites -- just what Boston-based Goldhirsh Group, publisher of Inc. magazine, did last year.

"Third parties have the skills and products, but most important, the bandwidth and the monitoring services," said Matthew Berk, vice president of technology at, a subsidiary of Inc.

Similarly, Cleveland-based KeyCorp will launch an e-commerce portal site to let its 400,000 small and midsize business customers in 14 states create Web storefronts to conduct secure, business-to-business e-commerce. Making it possible is an application hosting vendor -- Econex, partly owned by KeyCorp -- that will host the applications, hardware, software and network bandwidth, said Mickey Mencin, a marketing director at KeyCorp.

"Right now, [Internet application hosting] is a push-based market. ... Vendors are out there in front saying, 'Hey, this really is a great idea. It can solve a lot of your problems,'" said Thomas Kucharvy, president of Summit Strategies in Boston.

"Customers are feeling the pain" of high-technology ownership costs, he said, "but there isn't a widespread awareness yet that hosted application services could be an option to consider."

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