IDC Forecasts xSP Revenues Will Exceed $460 Billion in 2005

FRAMINGHAM, MA – JUNE 11, 2001 – Despite a recent spate of bad press, the xSP business model is here to stay. In fact, it will flourish. IDC forecasts worldwide revenues in this market will more than quadruple from $106 billion in 2000 to more than $460 billion in 2005.


"This is a market with great potential," said Laurie Seymour, manager of IDC’s xSP research program. "The momentum created by the increasing availability of broadband and the convergence of telecommunications, information technology, and service offerings around a utility model will propel the xSP model beyond its current challenges."

According to IDC, the xSP business model is already well proven in certain segments of the overall market. For example, some network service providers (NSPs) have been conducting their business for decades – and conducting it successfully. The NSP segment represents the largest part of the overall xSP market with $100 billion in 2000 revenues, or 94% of the market.

Because of the NSP segment’s maturity, however, it will grow slower than any other part of the market. While the overall market will increase at a compound annual growth rate (CAGR) of 33% from 2000 to 2005, the NSP segment will earn a CAGR of only 15%, and as a result, its market share will decline to 87%.

Other segments, though, will increase at a rate far above the overall market. The application service provider (ASP) segment will increase its revenues at a strong rate from $1 billion in 2000 to $24 billion in 2005, according to IDC.

"Service providers thinking about using the xSP model should pay close attention to the lessons learned from established NSPs and even the first-generation ASPs," Seymour said. "They shouldn’t be discouraged by the bad press or the economy. The bad press is temporary, and a slowing economy may even contribute to growing xSP acceptance as companies consider alternatives in times of tight cash."

IDC’s new bulletin xSP Market: Preliminary Worldwide Forecast and Analysis, 2000 and 2005 (IDC #B24740) looks at how big the xSP market is now and forecasts revenues for 2005. The bulletin divides the overall market into the following segments: business process providers, content service providers, development environment service providers, ASPs, system infrastructure service providers, and NSPs. The bulletin outlines factors driving and inhibiting growth in each segment.

To purchase this bulletin, contact Jim Nagle at 1-800-343-4952, extension 4549, or at

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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