AMR has an article on SAP A1S product, below are some excerpts form the same:

Code-named "A1S," the new product will complement SAP's existing midmarket products, Business One and All-in-One. A1S is an entirely new product built from the ground up using model-based development techniques and adhering to SAP's Enterprise SOA by Design vision.Based on the NetWeaver platform, the product will use the same services repository as the SAP Business Suite product. However, it's comprised of a new set of self-contained application process components such as order entry, invoicing, or warehousing. These can be mixed and matched to address a single application requirement or assembled into an extended ERP system. Unlike SAP's other products, A1S will initially be offered on the hosted model, which customers can configure extensively but can't modify the software itself. 

SAP's stated target for A1S are companies in the "lower midmarket," with between 50 and 500 users. Business One will continue to be aimed at the small (typically less than 50 users), single-site operation that needs technology support for the core fundamentals of managing a business. All-in-One is the on-premise, midmarket application, with deep vertical functionality supported by a large partner network. It has good momentum-currently installed at just under 10,000 customers, with 2,000 added in the past year. A1S will be positioned between Business One and All-in-One, and marketed as a system that can adapt and grow with SMBs as they grow and globalize. But because A1S is targeted at smaller organizations, some have speculated that A1S might make Business One obsolete.

A new way of buying, deploying, and managing ERP?

Buying - The A1S demonstration at sapphire focused less on the functionally of the product and more on the experience a buyer might have exploring and evaluating the product on the web. SAP is hoping to change the dynamics of how companies acquire software to manage their businesses by advocating a "see it, try it, buy it" approach.

Deploying - The new Adaptation Catalog also lets the business user actively configure the system by answering questions and selecting from available options. This should dramatically simplify initial configuration and make it much easier for customers to add functionality or change business and process parameters later. A1S will also provide a whole new approach to tracking and monitoring transactional activity, which should have interesting implications for performance optimization, managing business processes, and regulatory compliance activities.  SAP has also worked very hard to enhance the usability of the application.

Managing - From a long-term perspective, the hosted deployment model has the potential to close the loop between deployments and future enhancements and developments. SAP can now monitor how the product is used in the market, and the hosted model provides an accelerated feedback loop from product usage back to product development. 

A1S is currently being tested with a small group of customers and is expected to roll out gradually throughout 2007. A formal launch time of early 2008 was mentioned, but subject to change. SAP is being rightfully cautious about its release because so much about it is new: the architecture, the code, the delivery mechanism, and the go-to-market model.

SAP will also have to deal with the inevitable demand for A1S from its larger customers. Many of these companies have smaller sites, divisions, and plants that are not running on the centralized SAP business suite. CIO's may see A1S as an ideal alternative since it's based on the same technology platform and should be easy to integrate to the corporate system while offering lower maintenance and ease of use.

SAP has invested hundreds of millions of dollars so far to build A1S and create its supporting infrastructure from the ground up. It is targeted at a set of buyers which generally don't care much about the technology platform, just whether it works in a reliable fashion and fits their business needs.

Source: 1

Prashanth Rai