VPN Services to Generate $7.5B by 2005, IDC Study Says

Internet protocol virtual private networks (VPNs) have become a mainstream technology, one that so far has proved immune to the continuing economic woes, according to a recent report by IDC. The report says that demand for these services has never been higher and is on the verge of exploding. 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."

VPN Services to Generate $7.5B by 2005, Study Says

For the next few years, IP VPN-enabled equipment should be more popular than dedicated IP VPN equipment. However, the latter is currently growing faster. While IP VPN-enabled equipment revenue will increase at a compound annual growth rate 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.
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IDC published these results in "Worldwide IP VPN Equipment Market Forecast and Analysis, 2000-2005." To purchase this report, call IDC's PR hotline at 508-988-7988 or email ctoffel@idc.com.