A Juicy New Market
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One of the fastest-growing segments of the information industry is the emerging category of application service providers. These online companies offer software and services to customers "over the wire," reducing the cost and complexity of installing and maintaining information systems. By signing up with an ASP, customers may buy less computer equipment for their own premises, since the computing job is centralized at the ASP's facility. Now those ASPs are buying a lot of gear. Last year alone, they plunked down $119 million on information systems -- servers, networking equipment, and so on -- and $83 million on telecommunication services. Total spending by ASPs is expected to more than double this year, to nearly $1 billion.
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| Infrastructure spending by ASPs (in millions):
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| Category | 1999 | 2000 | Growth |
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| Software | $72.6 | $121.0 | 67% |
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| Hardware/networking equipment | $119.0 | $310.2 | 161% |
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| Telecom services | $83.1 | $173.2 | 108% |
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| Personnel | $110.3 | $172.3 | 56% |
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| Other* | $52.5 | $134.9 | 157% |
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| TOTAL | $437.5 | $911.6 | 108% |
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* Mostly third-party services
DATA: Cahners In-Stat
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The Mother Lode
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