B2B meets ASP in hybrid venture

Analysts have greeted the meeting of e-marketplaces and application service providers as a significant trend in the development of both sectors.

Digital Markets, which also operates auction site EuroSurplus.com, will now focus on building, hosting and maintaining B2B platforms for the SME (small to medium sized enterprise) market.

The company's CEO, Dr Karim Solh, told silicon.com that the ASP model was an ideal B2B delivery route for SMEs.

"Setting up a marketplace is a complex, costly and time consuming exercise. Instead of 30 companies hiring 30 teams to build 30 platforms, why not have one company syndicating it. B2B is 80 per cent based on common functionalities and 20 per cent based on reconfiguration. So why reinvent the wheel every time you set up a marketplace. It makes more sense to leverage existing platforms," he said.

Analysts agreed that while this latest model, dubbed MASP (Marketplace ASP) by analyst house Ovum, was still a rarity, it will soon become a standard strategy.

An overlap between the two sectors is already apparent and will become a definite trend within the next year, according to Nick Greenway, research analyst with Datamonitor.

"We will see the boundaries between digital markets and ASPs become blurred. Burnout in the B2B market will be matched by burnout in the ASP market and we will see the two sectors taking pieces of the others market. They lend themselves to each other," he said.

Mary Hope, B2B analyst at Ovum, shared Sohl's optimism, saying the model benefited all parties. It will provide a wonderful outlet for ASPs struggling to attract customers, she said, while companies like Digital Markets already have experience and revenue from ventures such as the Clearlybusiness portal, and are safe bets for SMEs looking to enter the B2B arena.

Alan Lawson, research analyst with the Butler Group, was a little more cautious. ASPs that base their entire strategy on the SME market could find their revenue stream drying up, he warned.

"We're all in favour of seeing more players in the B2B market, but the mid-market is a short term solution. A lot of these companies won't stay that way forever, some of the SMEs of today will be the major players of tomorrow. By providing them with B2B opportunities you could be doing yourself out of a customer," he said.