Analysys reports that the market for IP-based Virtual Private Networks (IP—VPNs) will grow by a factor of seven between 2001 and 2006, led by new technologies and opportunities.

by Tim Hills and Margaret Hopkins of analysys [July 11, 2001]

IP—VPNs are set to become part of business strategy for both corporate organizations and leading-edge SMEs with international networking requirements.

Service providers, anxious to identify services that generate value-added revenues and increase customer loyalty, should see IP—VPNs as a key vehicle for exploiting the shift towards IP-based network infrastructures and applications. Technologies, network products, and service offerings are developing rapidly to support IP—VPNs.

A number of key questions are pertinent:

• What are the different technologies available for implementing the different types of VPN and what are their strengths and weaknesses?
• What typical service offerings are available and what are their capabilities?
• What are users' perceptions and requirements of IP—VPNs?
• How well do technology and service offerings match users' requirements?
• What is the market potential?
• What are key issues for the future development of the market?

The Analysys report, Market Realities of IP—VPNs, aims to address these key points.

Chapter 1 explains what an IP—VPN is and how it might be implemented, provides a market forecast and addresses the potential requirements of corporate and SME customers, and how service providers might best meet them.

Chapter 2 provides an overview of the technology available, focusing particularly on the key issues of security, performance and network management. As well as providing a comprehensive overview of IPSec and MPLS, this chapter looks at the implementation approaches taken by some leading vendors.

Chapter 3 looks at how service providers are deploying this technology. It provides a detailed commentary of some of the services available, which are primarily targeting corporate customers, and an analysis of the service provider market in general. Using the results of commissioned market research,

Chapter 4 discusses the needs, expectations and requirements of IP—VPN users and those that are considering IP—VPN deployment.

Chapter 5 looks at the development of the IP—VPN market from the technology perspective and the user perspective, and arrives at some key messages for service providers.

Available as a separate volume is the Annex, which tabulates the detailed responses to the market research that was carried out on behalf of Analysys Research, covering 51 companies drawn from Denmark, Finland, Germany, Norway, Sweden, the UK and the USA.

0.1 Market potential
IP—VPN service revenues will grow rapidly Analysys expects the market for IP—VPN services (excluding CPE) in Western Europe to increase almost seven fold between 2001 and 2006 to US$6.6 billion.

Despite such rapid growth, the 2006 figure will still be less than 10% of that projected for the overall datacommunications market.

Between 2001 and 2006 the IP—VPN market in Western Europe will still be in the early stage of its development and in the lower part of the usual S-curve of market growth. However, in the longer term, IP—VPNs have the potential to take a significant part of the business segment of the datacomms market once the technology has matured and the overall migration of telecoms to IP-based networks is complete.

Disclaimer
Figures and projections contained in this report are based on publicly available information only and are produced by Analysys Research Limited independently of any client-specific work within the Analysys Group. The opinions expressed are those of the stated authors only.

Analysys Research Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the normal UK publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark.

— End