Look to ASPs if communications rates fall

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You have probably heard of application service providers. Instead of storing application software on a personal computer, an ASP compiles the software on a group of servers that it manages and operates, thereby allowing users to use the application software via a network.

The PC becomes a mere tool for looking at files, and there is no longer any need to worry about its capacity and performance.

If the ASP business becomes more widespread, the competition over PC performance that is now seen will disappear, and users will be freed from the hassles of complex software management.

Consequently, the ASP business is seen as a very big factor that will drive change on the computer scene.

For example, a firm using an ASP will no longer need staff to upgrade its applications. Instead of upgrading software one computer at a time, this will be achieved by just making a single alteration on the server. The greatest advantage of this is that it enables substantial reductions in computer maintenance crews.

If communications charges are high, however, it will be more economical to continue keeping files on a PC than accessing them via a phone line.

Essentially, the problem that immediately comes to mind in a situation where charges are high is that costs pile up whenever you obtain information via the Internet. High communications charges are hindering the market penetration of not only the Net but also ASPs, and they can only be fatal for Japan’s IT industry.

Although the government is reluctant to lower the charges for hooking up to NTT’s communication lines, the power of the market will force them to change that stance sooner or later. And NTT, which owns 67.1 percent of NTT DoCoMo’s shares, will face difficulty adjusting to lower, more competitive global charges.

PC makers will also face severe diversifications, ranging from improving CPUs and memories to installing computer functions into other media, like watches or mobile phones. Software makers will have to do more business-to-business deals than business-to-consumer ones.

Failure to diversify will strongly affect their share prices in the future.