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VPNs: $23B And Growing

Make no mistake about it, Virtual Private Networks (VPN) are still big business.

A new report from Infonetics Research pegs the value of the VPN services market in 2005 to have been $23 billion, which represents 14 percent growth over 2004.

Growth is expected to continue, hitting $29 billion by 2009.

Jeff Wilson, principal analyst of VPNs and Security at research firm Infonetics, told internetnews.com that the VPN services market growth for 2006 is currently pegged at 11 percent.

In 2005, site-to-site VPNs accounted for 77 percent of the market's revenue while remote access only accounted for 23 percent. Wilson noted that a similar revenue breakdown is likely to continue.

"By 2009 we expect site-to-site will drop slightly to 72 percent and remote access will grow to 28 percent," Wilson said.

"There is a three or four year cycle of spending on remote access versus site-to-site in general, where one is on the rise while the other falls, but the introduction of SSL VPNs has introduced an extended period of growth for remote access VPN services."

SSL-VPNs offer the promise of simple remote access connectivity since from an end user standpoint they typically involve just a Web browser to access a corporate network.

They differ from their principal technology competitor IPSec VPNs in that IPSec typically requires an additional client application.

Earlier this year, Infonetics reported that IPSec is currently dominant though losing ground over the next few years to SSL-VPN-based VPNs .

In this most recent report, Wilson has pegged IPSec revenue as declining every year through 2009, while SSL-VPN and MPLS (Multi-Protocol Layer Switching) and MPLS/IPSec revenues rise.

Though security is a key concern that helps drive VPN growth, there are other drivers, as well.

"For VPNs the driving factors are the continued rollout of MPLS, the continued distribution of companies (spreading out, becoming more and more decentralized), and the increased need to have company information available at all times from all locations to maintain a competitive edge," Wilson said.

Infonetics' report also sizes the managed security market, which it values at $5 billion in 2005.

Nearly half the revenue comes from large organizations, with medium-sized outfits accounting for a third and small companies only by 21 percent. The managed security market is expected to grow to $8 billion by 2009.