IDM Feature: VPNs Are Hot, but What Are They?

VPNs Are Hot, but What Are They?

By Laura Taylor of

Market Overview

Market research firms and vendors are predicting that the worldwide market for VPNs will reach, if not exceed, $10 billion by 2003. Conservatives estimate that the growth rate will be 300%, while others predict a growth rate of up to 1000%.

VPNs, Security, Networks

Market Size (Revenues): 1999 $2.3 Billion

Market Growth Rates: 300 - 1000%

Market Leaders: Nortel, Checkpoint, Cisco, Lucent, Axent, Nokia

Technology Challengers: Frame-relay, ATM, DSL

To gain a historical perspective, one might consider X.25 to be the forerunner of VPNs. X.25, an early internet packet switching protocol, and once the cornerstone of Internet WAN links, used virtual private circuits on public networks similar to how VPNs are being implemented today. However, in recent years, X.25 has seen little use in the U.S., primarily due to faster technologies such as Frame-Relay, opening the door for VPN opportunities.

Unquestionably, VPNs are hot. But what are they? Most experts will agree that the acronym stands for Virtual Private Network, however, what a VPN is depends on whom you ask. According to Eric Wolford, Director of IP marketing for AT&T Internet services "VPNs tend to now be what the market says they are." The best way to find out what a provider means when they talk about VPNs is to review its VPN Service Level Description. If a VPN provider does not have a Service Level Description, you can be sure that it is not clear on what a VPN service is supposed to offer.

So is a VPN a product or a service? The answer is both. A VPN product is a product used to facilitate a VPN service. Different vendors will give you different VPN definitions, depending on what kind of product they are trying to sell, and clearly there are multiple types of VPNs. In trying to ascertain VPNs, you need not chase your tail further. Defined simply, a VPN is a private encapsulated network service that runs over a public network. VPNs evolved as a response to the high-cost of private leased lines and frame-relay, and utilization of VPNs is a way of creating secure network services without having to rely on third-party providers who charge monthly usage or bandwidth fees. With VPNs, there is an initial setup and implementation cost, but unlike leased lines and frame-relay, there are no monthly service provider charges.

VPN implementations typically fall into three categories: intranet, extranet, and secure remote access. Within each of these three categories there should exist some element of Access Control, Authentication, and Encryption. VPNs can also be static or dynamic. Static VPNs are up full time. Dynamic VPNs operate on demand and are more commonly used for mobile workers and telecommuters.

Intranet VPNs connect multiple sites within an enterprise, and are important for safeguarding interoffice communications, i.e. connecting an East Coast office with a West Coast office over publicly available internet POPs. The second VPN category is secure remote access VPNs, which we believe will grow as the need to connect mobile workers increases. We believe secure remote access VPNs will slowly start to replace modem banks and RAS servers as companies phase out traditional data communications for more inexpensive, secure, and flexible VPN solutions. As Global Electronic Villages emerge, extranet VPNs will also become a significant growth market. Extranet VPNs connect one enterprise to multiple enterprises. Suppliers want to be connected to their inventory markets. Hospitals want to be connected to primary care providers. Companies want to be connected through their ISP or ASP to their website. Financial institutions need to secure monetary transactions. Business partners need to share pieces of their networks with other partners.

Unfortunately, as any seasoned network administrator who has implemented VPNs can tell you, installing and configuring VPNs is not easy. In fact the complexity of the installation and on-going management has created an entirely new service market. Due to popular customer demand, many ISPs, ASPs, and webhosting companies are now offering Managed VPN Services to resolve the complexity problem.

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The Authors

Laura Taylor is a Research Director with TechnologyEvaluation.COM's Security Practice. Ms. Taylor manages the research of security technologies and their vendors, identifying and qualifying key criteria necessary to assist IT decision makers in making best-choice infrastructure investments.

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