What do you think about the emerging application service provider (ASP) business? If you haven’t already, you might want to start thinking about it, because the ASP market has potential to take off. In fact, it's already on its way.

Microsoft is working on Web-enabled versions of Microsoft Office that are going to make their way to the ASP market. Citrix and British Telecom have teamed up to support an ASP business that’s making enterprise resource planning (ERP) applications available to small- to medium-sized businesses. As I mentioned in an earlier column, ASPs have already begun working on a small scale, letting people fill out tax returns on the Intuit Web site instead of buying the software, installing it on their PCs, and buying upgrades every year to reflect changes in the tax code, for example.

From a technical perspective, ASPs are already capable of making a real difference in the world of application distribution. Install applications on a terminal server running Windows NT Server 4.0, Terminal Server Edition (TSE) and Citrix MetaFrame, and you can make those applications available to people with a network or Internet connection to the server and with the proper client software. Of course, you have to make sure that you set up the applications properly (which can be a chore), and you have to manage security on the terminal server, but it's technically possible. However, if that technical possibility is to become reality on an inter-company or extra-company basis and on a large scale, we need to get beyond a couple of remaining hurdles.

For the providers, we need a licensing scheme that works. Licensing—or, more to the point, the diversity in licensing approaches—is a major headache for terminal services and will only be worse for ASPs. Microsoft is presently running a testing program with about 50 ASPs to see how terminal server licensing might work. In this program, Microsoft charges pilot ASPs on a monthly basis for named user accounts. Citrix, on the other hand, charges its ASP customers each month based on the number of concurrent users, without regard to who those users are. For an ASP market, particularly an ASP market aimed at the consumer sector, the Citrix approach makes a lot more sense because ASPs won’t have to maintain named accounts. Even if the Microsoft approach worked better, so long as we need two server-side products to support NT-based terminal services, those two server products had better use the same licensing scheme to keep the bookkeeping manageable. Licensing needs to be either on a named-account basis or based on concurrent usage, not both.

For the customers, we need a physical infrastructure that works. Public Internet connections aren't as reliable as they need to be for people to depend on applications available only through an ASP. If you really need Word to write up that quick report, will you accept the excuse, "Sorry—it’s raining, so you can’t log on"? If the consumer side of the ASP marketplace is going to take off, people need to be able to get online on demand and expect to be able to do so, or they won’t use the applications.

What about you? What would it take for you to trust an ASP, either for your company or for personal use? Or do you think terminal services are best for a company network and not applicable for public networks and consumer needs?