The application infrastructure provider (AIP) market is being whittled down to just a handful of players, with a few remaining stragglers hanging on, according to IDC. With the consolidation and concentration of this market nearing its end, it has become fairly clear that the traditional IT outsourcers have carved out a significant part of the U.S. market. IBM Global Services clearly leads the AIP market, followed by EDS. IDC estimates that these two IT outsourcers together compose 49.3 percent of the U.S. market.

"Although the AIP market is relatively new compared to its big brother, traditional outsourcing, the results of the top 10 players can be attributed to some key factors," said David Tapper, manager of IDC's Networked Infrastructure Management Services research program. "These factors include how players are positioning themselves, how they incorporate key winning service attributes, and the degree of customer revenue."

IDC ranks the top five players in the U.S. AIP market according to 2001 revenues as follows:

1. IBM Global Services

2. EDS

3. DIGEX

4. C&W/Exodus

5. Genuity

Although these firms are leading the U.S. AIP market, the future of outsourcing and managed services is being threatened by the slow emergence of providing IT as a set of utility-like offerings, IDC believes. It is this shift that IBM Global Services and EDS may not be able to manage in the long run and that may potentially allow some of their competitors in the AIP space to take the mantle of leadership. IDC also expects telecommunications companies to increase their share of the AIP market in the long run.

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