xSP Market to More Than Double

Even though the xSP market still faces challenges such as a dubious reputation, leadership and management scandals, overhype and a poor economy, market research firm IDC today announced it finds this broad-based market, which encompasses several service categories, not only stable but growing.

According to Worldwide xSP Forecast, 2003-2007, the firm reports that the industry will grow at a compound annual growth rate (CAGR) of more than 17 percent, which the company says represents larger growth than more mature services market.

Despite the challenges mentioned above, IDC reports that xSPs were a $234 billion market in 2002 and is expected to grow to almost $530 billion in 2007.

“Customers are beginning again to explore the possibilities and benefits that utilizing xSP services can bring them,” said Laurie A. Seymour, IDC xSP program manager.

According to IDC, the “x” in xSP represents five markets:

  • Business service providers
  • Content service providers
  • Application service providers
  • System infrastructure service providers
  • Network service providers

According to the report, some xSPs reported growing customer interest in late 2002 to early 2003 after an initial setback in 2001 and most of 2002. An increase in interest has helped improve the overall tone of the xSP market, which is beginning to reinforce that xSP isn’t simply a fad or a faze, but rather a different delivery model for services.

IDC predicts xSPs will continue to grow and in many cases complement traditional services and outsourcing markets over the next five years. Consolidation will continue, IDC predicts, because economy of scale is a key factor for xSPs.

A positive balance sheet, IDC reports, is more important than ever as customers and partners will to be reassured that strong leadership, solid financials and strategic planning are in place.

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