IP VPN Services Market on Fire

IP VPN revenues to grow by 15 to 20 percent in 2002.

It’s no secret that spending on most information technology items declined severely in 2001 and continued to stagnate through the first half of 2002. Now a new report from market research firm In-Stat/MDR says that expenditures on IP VPN-related services grew by leaps and bounds during the same time period.

According to In-Stat/MDR, most U.S.-based purveyors of IP VPN services report that they’re on track to post 15 to 20 percent revenue gains in 2002. As a result, In-Stat/MDR projects some service providers could more than double their 2001 revenues. Moreover, IP VPN-related revenues will expand at a compound annual growth rate of 33 percent between 2001 and 2006.

In-Stat/MDR senior analyst Henry Goldberg says that for many service providers, IP VPN-related revenue growth has outpaced growth associated with other networking services.

In Goldberg’s view, a variety of factors account for the explosive growth of IP VPN services, including the migration of existing Frame Relay and ATM customers to IP VPN services, and the gradual gain in market share of outsourced services (which are increasingly viewed as an acceptable alternative to the in-house approach).

In the near term, Goldberg says, an emphasis on secure communication across the Internet, coupled with new projections for economic growth, will combine to drive IP VPN service revenues for the next several years.

In-Stat/MDR also found that enterprise IT staffs are more likely to exploit IP VPN services as a means to consolidate multiple networks with different access circuits down to one access circuit with a single service (IP VPN). As a result, In-Stat/MDR says, almost all of the big IP VPN service providers offer or plan to offer network-based VPN services.

About the Author

Stephen Swoyer is a Nashville, TN-based freelance journalist who writes about technology.