7/17/2006 -- VPN services were a cash cow last year for service providers, generating $23 billion in revenue in 2005. Nor has the VPN services market peaked. In fact, market watcher Infonetics Research says, demand for VPN services could grow by more than one-fifth (22 percent) over the next three years, ultimately approaching the rarefied $30 billion mark.

That's a drop in the bucket, of course, compared with projected demand for managed security services, Infonetics analyst say. That market amounted to nearly $5 billion last year, but is expected to grow by more than two-thirds (68 percent) to $8 billion by 2009.

Both VPN and managed security services revenues are surging because of increased worldwide deployments of MPLS, which -– coupled with the growing complexity of VPN and security solutions -- has created a recipe for confusion, Infonetics analysts say. "The number and variety of attacks affecting most organizations is increasing at an alarming rate, and the technologies needed to effectively combat all of the possible attacks are simply too difficult for many organizations to deploy themselves," said Jeff Wilson, principal analyst for VPNs and security at Infonetics Research, in a statement. "In particular, attacks aimed at specific types of content (from business applications like Oracle and SAP to instant messenger traffic) are wreaking havoc on organizations -- and not just big companies; companies of all sizes are being affected."

Elsewhere, MPSL, MPLS/IPSec and SSL revenues should grow over the next few years, even as vanilla IPSec revenues decline, Infonetics projects.

Last year, more than three-quarters (77 percent) of VPN service revenues came from site-to-site VPNs, while just 23 percent were from remote-access VPNs. On the managed security services front, almost half of all revenues came from large organizations, about one-third from medium-sized companies and just 21 percent from small firms. -Stephen Swoyer