The market for standard managed IP VPN services is growing quickly but will flatten significantly by 2007, according to IDC‘s latest forecast of the Western European IP VPN market. In addition, managed services are growing faster than in-house DIY (do-it-yourself) networks, and are dominated by MPLS. IDC’s study shows the spending on managed IP VPN services in Western Europe grew 107 per cent in 2003. Of the five largest countries, Italy’s market grew fastest at 131 per cent.
IDC expects double-digit growth in the next three years until 2007, when the market will flatten significantly to 5 per cent growth. The decline in growth will be due to saturation among large companies following the current rapid growth phase, spending shifting from standard IP VPN connectivity to applications such as VoIP and hosted business applications, price competition, and alternative layer 2 services such as Ethernet beginning to cause some migration from layer 3 IP services.
More sites are connected to in-house, DIY Internet VPNs than managed IP VPN services, but managed services are growing at a faster rate. In the managed market, MPLS accounts for well over half of site connections and IPsec will wane by 2007 as MPLS‘ share increases and other technologies such as SSL grow from a small existing base.