There aren't many application service providers left standing from the early days, and Corio Inc. has emerged as a leader in the area. It's added a feather to its cap by acquiring the ASP assets of Qwest Cybersolutions LLC, the 3-year-old ASP subsidiary of Qwest Communications International Inc. Corio will provide application management and ASP services to its new customers, but data will continue to reside at Qwest data centers. Terms of the deal were not disclosed.

For Corio, the deal strengthens its position as one of the industry's leading ASPs. Corio has yet to reach profitability, but it's on a good track to do so, Summit Strategies analyst Laurie McCabe says. Even though it built itself on a roster of dot-coms that went bust, Corio learned and recalibrated its offerings. Eighty percent of its customers now are traditional businesses. Qwest Cybersolutions "got really quiet three months ago, so we don't know how many customers they have," she says. It was probably 100 to 150 last year--"so even if it's between 50 and 100 now, Corio could have grown its customer base by 50% to 100%."

The deal helps Qwest take a step toward cleaning up its balance sheet. McCabe says rumors of a sell-off have been around for some time, particularly after a new VP was named for the subsidiary. "Reading between the lines," she says, Qwest Cybersolutions "was not too much longer for the world."