SCOTTSDALE, Ariz., August 20, 2002 -
With an impressive 90% of surveyed large US organizations (1000+ employees) either currently deploying an IP VPN or planning to do so within the next two years, IP VPN service revenues will grow at a CAGR of 33% between 2001 and 2006. In-Stat/MDR reports that IP VPN service revenues are already growing strongly in 2002, with major US service providers expecting increases from 15% - 20% to more than doubling of 2001 revenues.
“IP VPN service revenues are growing faster than most service providers’ other networking services’ revenues,” says Henry Goldberg, a Senior Analyst with the high-tech market research firm. “Various factors like the migration of Frame Relay/ATM service users to IP VPN services, the gradual gain in market share of outsourced services vs. the in-house approach, heightened focus on security when communicating across the Internet, and projected economic growth, will drive IP VPN service revenue growth strongly in coming years.” One of the main barriers that providers must overcome will be the desire of end-users to implement in-house solutions as opposed to using outsourced IP VPN services. In an In-Stat/MDR survey of 436 US end-user organizations, 91% of current VPN users implemented in-house IP VPNs, with the majority doing so because they believe they have more control over security. To increase market share, service providers need to develop more effective strategies to convince end-users of the benefits of outsourced IP VPN services and overcome any concerns that they have about implementation of security.
In-Stat/MDR also found that:
Of the organizations surveyed that currently have or plan to use an IP VPN service, 74% either use a network-based service or may be interested in subscribing to one, and 72% either have implemented priority classes of service or are interested in subscribing to this option. There is also strong interest in bundling firewall and other security services, such as, virus protection and intrusion detection, with VPN services.
There are a number of important trends emerging in VPN services:
Enterprise IT staffs are being pushed to reduce costs in the slow economy, and IP VPN services allow them to collapse multiple networks with different access circuits down to one access circuit to a single service.
Almost all leading IP VPN service providers either currently offer or plan to offer at least one network-based VPN service.
The barriers to becoming a VPN service provider are dropping, as companies develop innovative business models to offer service without having their own networking facilities.
Recent In-Stat research, IP VPN Services: Virtually Unstoppable (#IN020124TX), provides a comprehensive analysis of the IP VPN services market, from both supply and demand side perspectives. End-user interests and directions in IP VPN services are identified, based on a survey of 200 US business, government, and education organizations. The report profiles 13 leading IP VPN service providers, describing their overall service offerings, key service features, sample service pricing, customers, and competitive strengths. Market shares for 2001 are estimated for major service providers serving the US market, and a five-year forecast is made of the US IP VPN services market.
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