IP VPN market to flatten by 2007, but grew 107% in Western Europe

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. Spending on managed IP VPN services in Western Europe grew 107% in 2003. Of the five largest countries, Italy’s market grew fastest at 131%. IDC expects double-digit growth in the next three years until 2007, when the market will flatten significantly to 5% growth. The decline in growth will be due to several factors: saturation among large companies following the current rapid growth phase, spending shifting from standard IP VPN connectivity to applications such as voice over IP and hosted business applications, price competition, and alternative layer 2 services such as Ethernet beginning to cause some migration from layer 3 IP services.