ANNAPOLIS, MD. - USinternetworking this week boosted itself - and the application service provider market - announcing a strategic alliance with Microsoft and more than $300 million in financing that shores up the company's financial future.
Microsoft is making a $50 million equity investment in USi and is partnering with the ASP to develop and market managed application services built on the Windows 2000 and .Net platforms. USi also announced a strategic alliance with wireless ASP Aether Systems, which is making a $10 million equity investment in the company. Other financing comes from GE Capital, Acqua Wellington North American Equities Fund Ltd., and previous investors, USi CEO Andrew Stern said.
Analysts say the investments are good news for ASPs, which have been floundering recently with stock prices plummeting and some companies, such as Pandesic, falling by the wayside.
"I was really surprised about the funding given that the word on the street from ASPs is that money is hard to come by," says Amy Mizoras, IDC senior research analyst, applications and ASP research. "It really validates not only USi as a company, but it validates the ASP model in general."
With the Microsoft alliance, USi gains muscle in marketing managed application services. The two companies will join in developing, delivering and marketing services that will be powered by the Windows .Net platform. USi already offers Microsoft Exchange-based messaging and collaboration service through its iMAP portfolio of services. The alliance builds on that relationship by bringing Microsoft's engineering and technical support to all of USi's products.
USi has agreed to make Microsoft's technology platform its standard platform, and plans to use that platform for more than 55% of its products within 3 years, Stern said. Other platforms, such as UNIX, still will be used, depending on the customer and the application, Stern said. In addition to providing Microsoft products, USi will continue to deliver enterprise applications such as Siebel, PeopleSoft, Lawson and Ariba.
USi says the first of the Microsoft technology-based services will be available next month, with additional services released through May 2001. In addition, Microsoft will join USi to market its offerings to targeted customers beginning in February.
"In the next few months we expect to see some interesting new hosted commerce services based on Microsoft Commerce 2000 and the Biztalk server platform," said Mark Chestnut, general manager, ISP business development for Microsoft. He said USi customers also can expect an enterprise line of business applications based on the Microsoft Sequel Server 2000 and enhanced messaging and collaboration services based on Microsoft Exchange 2000.
In the wireless arena, USi has partnered with Aether to create enterprise-level managed application services for wireless devices. The first joint offering - wireless e-mail and messaging services for Microsoft Exchange via Blackberry - is available immediately. USi says wireless-enabled Web and e-commerce applications will be released in the next two months, with more wireless applications coming in 2001.
In addition to the investments from Aether and Microsoft, USi announced:
The commitments are contingent on several conditions, including the receipt of the full $50 million equity investment from Microsoft.
USi also announced the closing of an equity financing arrangement covering the sale of $140 million in USi common stock with Acqua Wellington North American Equities Fund Ltd. The arrangement gives USi access to up to $140 million during the next 28 months.
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