IP VPN Services Go Mainstream, Driving Equipment Revenue to $7.5 Billion by 2005, IDC Says

FRAMINGHAM, MA – JULY 19, 2001 – Internet protocol (IP) virtual private networks (VPNs) have become a mainstream technology – and a technology that so far has proved immune to the continuing economic woes. In fact, demand for these services has never been higher and is on the verge of exploding. The aftermath of the explosion will be increased opportunity for IP VPN equipment suppliers. IDC forecasts revenue generated from IP VPN equipment will more than triple from $2.3 billion in 2000 to $7.5 billion in 2005.


"IP VPNs are attractive for their low cost, ubiquity, and the flexibility they provide in ad hoc connectivity,"said Jason Smolek, an analyst with IDC’s IP VPNs research program. "Companies that deploy IP VPNs don’t need to build private lines between their sites, and for organizations with multiple sites, this represents huge cost savings in terms of capital and time. It also makes an IP VPN an excellent vehicle to e-enable a company because business processes can be linked without resorting to expensive infrastructure investments."

For the next few years, IP VPN-enabled equipment will be more popular than dedicated IP VPN equipment. However, the latter is growing faster. While IP VPN-enabled equipment revenue will increase at a compound annual growth rate (CAGR) of 24% from $1.7 billion in 2000 to $5.1 billion in 2005, dedicated IP VPN equipment will earn a CAGR of almost 34% during the same time frame.

Routers and firewalls account for the largest share of the IP VPN-enabled equipment segment. Together, they will account for more than 70% of the segment’s revenue through 2005.

IDC recently published Worldwide IP VPN Equipment Market Forecast and Analysis, 2000-2005 (IDC #B25021). This report forecasts revenue through 2005 by IP VPN-enabled and dedicated boxes. The enabled segment is further divided into routers, remote access servers, digital subscriber line access multiplexer devices, asynchronous transfer mode switches, and firewalls. The dedicated market is segmented by public and enterprise revenue. The report discusses factors driving and inhibiting growth and provides insight into trends affecting the market. The report also includes profiles of the leading equipment vendors and of carriers offering IP VPN services. To purchase this report, call IDC’s PR hotline at 508-988-7988 or email ctoffel@idc.com.

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 www.idc.com.

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


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