IBM is in discussions with its partners to create a pre-packaged set of hosted applications, a move that could ultimately create an online analogue to traditional packaged applications and spur market adoption of software services.
Though still under development, the project is meant to simplify the process of procuring a full suite of hosted business applications -- and boost IBM's billion-dollar hosting business, people familiar with the plan told ZDNet UK sister site CNET News.com.
The initiative, called by one member the "IBM Software as a Service Partner Council," could be announced as early as next month at IBM's PartnerWorld conference in Las Vegas. An IBM representative declined to comment on Thursday.
The creation of an IBM-hosted application bundle is one of several initiatives at Big Blue to promote the notion of software as a service, or having applications delivered over the Internet. This model for buying software "on demand" is taking hold after years of missteps and failures, which were due to both technical challenges and faulty business models.
IBM on Tuesday acquired Corio, an application service provider serving medium-size businesses. IBM also has programs to encourage independent software vendors, or ISVs, to convert their applications to run effectively over the Internet.
Analysts said IBM's growing interest in hosted services reflects a belief among software companies that spending on hosted applications offers brighter growth prospects than traditional software sales.
"It's where some of the hottest growth in the market is right now," said Tom Kucharvy, president and chief research officer at Summit Strategies. "It's going to be many years before we reach a crossover point, but the growth rates are much higher for software services."
Indeed, the potential for boosting the number of its application hosting customers, particularly to midsise companies, drove IBM to buy Corio. Until now, IBM's application outsourcing business has been primarily focused on larger customers, which favour customised development and installation, while Corio has software to run a simplified application installation to a large audience, said analysts.
"The hosted market will grow at over 20 percent annually -- that's four times as fast as unhosted software," said Jim Corgel, general manager of IBM's e-business hosting services, when discussing the company's rationale for buying Corio.
According to researcher IDC, hosted software will grow at an annual rate of 26 percent for the next few years, from $2.1bn in 2002 to $8.1bn in 2007. Meanwhile, the software market is seeing only single-digit growth rates, with most of the spending concentrated in a few areas, such as infrastructure, security and management.
