IDC Finds That Carriers Lead, But Fail to Dominate, IP VPN Services Market

FRAMINGHAM, MA – MARCH 4, 2003 – Major telecom carriers hold most of the top 10 positions for outsourced and carrier-managed IP virtual private network (VPN) services in the U.S., yet they are far from dominating this $2.3 billion market. Nearly two thirds of this year's revenues will be captured by small carriers, specialty VPN service providers, outsourcers, and local ISPs. As a result, IDC expects to see significantly greater competition as the many competitors in this market fight it out to deliver the VPN services in high demand by businesses of all sizes and in all industries.


AT&T has rocketed up the market share table to a place befitting the largest telecom services provider in the U.S. IDC's analysis shows that the market leaders at yearend 2002 were AT&T, WorldCom, Savvis, Sprint, and Genuity, in order of revenue generated from IP VPN services. The major carriers, primarily focused on each other, will continue to fiercely fight over Fortune 1000 customers in the months ahead. This leaves a vast market to smaller carriers, ISPs, VARs, and IP VPN specialists to mop up the medium and small companies that are also deploying IP VPNs in large numbers.

The biggest winner in a year's time will be the provider that can successfully penetrate the huge do-it-yourself (DIY) market, which IDC estimates at $6.8 billion in 2002 and will grow to $10.3 billion in 2007. Any carrier or provider that can stem the tide toward DIY will rapidly gain market shares. The DIY pie is huge and largely unassailed to date by even the largest carriers and outsourcers.

"The biggest competitor to every carrier on IDC's market share list is the internal IT staff of every potential customer," said Steven Harris, research manager for IDC’s IP VPN research program. "Any carrier or service provider able to provide high quality connectivity and responsive IP VPN service management at low cost and with multiple implementation options will stand to gain significant market shares in the future. The potential universe of competitors is vast and will increase as more providers enter this fast growing market."

IDC’s recently released study, IP VPN Carrier Market Shares and Competitive Analysis (IDC #28944), ranks the top 10 providers of outsourced IP VPN services, all of which are currently telecommunications carriers, and graphically depicts those carriers in a Leadership Grid.

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About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC’s customers comprise the world’s leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at

IDC is a division of IDG, the world’s leading IT media, research, and exposition company.


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