Corporate purchases of IP virtual private network services continue to surge forward, a trend that analysts say is being accompanied by a shift away from the use of frame relay technology to carry network traffic.
IT executives who are rolling out IP VPN connections said last month that the networks provide better security than dial-up systems and many other current approaches. They added that VPNs also can help keep networking costs in check, allowing them to vastly increase bandwidth to handle new applications.
For example, The Stride Rite Corp., a footwear retailer in Lexington, Mass., recently announced plans to deploy an IP VPN connecting 264 stores in the U.S. The new network will replace dial-up services with a constant VPN connection at each store and upgrade available bandwidth from 56Kbps to 384Kbps or more, said Stride Rite CIO Yusef Akyuz.
That will help the retailer accommodate a new point-of-sale system and added applications, Akyuz added.
In another new deal, MCI Inc. announced a contract with AMF Bowling Worldwide Inc. in Richmond, Va., to connect 350 bowling alleys via MCI’s IP VPN Broadband Service. The VPN setup will replace a satellite communications system that sometimes suffers from slow performance, said Rohana Meade, vice-president of IT at AMF.
According to both Akyuz and Meade, cost was a major factor in choosing VPN services.
Nearly all the major network service providers are marketing IP VPN offerings as a replacement for frame relay, said Ron Kaplan, an analyst at IDC in Framingham, Mass. Kaplan said VPNs are usually less expensive than frame relay networks, although the cost differences have narrowed as carriers have lowered the price of frame relay to keep it competitive.
Sales of IP VPN services in the U.S. last year amounted to US$640 million, according to IDC, which forecasts that sales will grow to US$3.3 billion in 2009 — an annual growth rate of nearly 40 per cent. This year, sales are expected to total just over US$1 billion, Kaplan said.
Meanwhile, the number of frame relay ports is declining.
IDC counted 1.3 million ports in the U.S. last year, a number that is expected to drop to 1.2 million this year and fall to 751,000 in 2008, said analyst Steven Harris. “Frame (relay) is definitely decreasing, and more and more carriers are eliminating it completely,” he said.
In Canada, Bell Canada is no longer offering new frame relay contracts and is gradually migrating customers to IP.