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The venture marks a big move for Verio (nasdaq: VRIO), which plunked down $30 million, a 39% stake in the business. Verio, which sells Internet access and Web-hosting services to 300,000 customers, hopes Agilera will include new value-added hosted applications to its store and higher margins to its business.

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Agilera will be just one of many entrants in the rapidly growing rent-an-app, or application service provider (ASP) market. But the company has certain advantages, like its funding and its focus. What's more, Agilera will focus heavily on customer-care solutions, which President Rob Unger hopes will give the company an extra edge.

Agilera, which will be headquartered in Englewood, Colo., where Verio and Ciber (nyse: CBR) have their own operations, has great backing from other founders besides Verio. Ciber, a leading enterprise software integrator and information technology (IT) consulting firm, has put up its Ciber Enterprise Outsourcing division as part of the deal. That amounts to 42% of the company. Tech venture firm Centennial Ventures has invested $15 million, which accounts for the remaining 19% of the company.

"Rather than simply forming commercial partnerships with infrastructure providers or software integrators, the founding companies have taken big stakes in the company and that's a big difference for us in the market," Unger said.

Agilera's major advantages against the likes of Qwest Communications International's (nyse: Q) Cyber Solutions, AT&T (nyse: T) and other telecom-type players coming into the ASP market is its experience with enterprise software. "Most other players coming to market now are from the telco space, which is really the commodity part of this business," said Unger. "This is supposed to be about solutions, and we have experience in formulating entire application solutions."

Agilera's main focus will be to address midmarket companies that already have some IT infrastructure investments and are tired of constant upgrading and maintenance. Agilera will allow Verio to reach into higher-margin enterprise markets. "That's going to be a high-margin business for us," Unger said.

But regardless of its success in the higher-end enterprise market, Agilera will have no choice but to address the small- and medium-sized markets where there is manifest growth. For example, the new company will let Ciber access Verio's smaller businesses that are intent on becoming e-commerce players.

"The problem with the high-end stuff is that this is the second time around for these folks, they already have a lot of the infrastructure, and it's alleviating the headache. But they're not going to be spending as much as the other segments," said Jeanne Schaff, senior analyst at Boston-based Forrester Research.

A recent Forrester study shows that revenue from hosted apps will reach $11.3 billion by 2003. The lion's share of that revenue will come from smaller companies, according to Forrester: Revenue will reach roughly $3.85 billion for companies with less than 100 employees; roughly $6.62 billion for companies with less than 1,000 employees; $605 million for companies with 1,000 to 5,000 employees; and $233 million for companies with more than 5,000 employees.

Agilera already has large enterprise customers, but while rented software packages are all the rage, its attention to small-business needs and customer service will be its best advantage in the quickly expanding market.

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