IDC: Long-Term VPN Sales to Climb

Releasing some positive news as the industry is in thedumps, research firm IDC issued a report today saying the market for VirtualPrivate Networks will experience significant long-term growth.

IDC estimates revenue derived from VPNs will amount to$5.4 billion this year, including VPN service providers and products forenterprises to create their own VPNs. Across both segments, IDC expects themarket to expand to $14.7 billion by 2006, a 22% compound annual growth rate.

VPNs allow traffic from remote sites to be as privateas traffic inside the firewall through a combination of encryption andauthentication. Telecommuters and branch offices often use VPN clients to geton enterprise networks as if they were on a machine in the main office.

Today, the do-it-yourself VPN market is the largestsegment of the market. By 2006 it should grow to a $9.4 billion slice of the$14.7 billion pie, according to IDC’s projections. IDC says more companies areimplementing in-house VPN solutions, driving growth for VPN products.

Some telco carriers and ISP also offer VPN services forbusiness customers, and IDC expects the third party market to grow at a goodclip. It should rise to $5.3 billion in 2006, accelerated by improvements inVPN services .

While IDC is bullish on VPN sales, VPNs still face somehurdles. Although IDC says vendors will continue to improve VPN products, manycustomers report implementing a VPN is a complex task.

In addition, consumer broadband services are beginningto balk at VPN services at home. Last week, it was revealed that two majorcable companies, Comcast Corp. and Cox Communications Inc., have language intheir terms of service prohibiting users with home accounts to use VPNs. Homeusers who wish to use VPNs must upgrade to small business accounts, which cancost more than twice as much as a consumer account. –Chris McConnell