APAC Enterprise Data Services Mkt To Reach $27 Bn By 2017

Traditional technologies such as asynchronous transfer mode (ATM), frame relay and leased circuits are on their way out in most countries, making way for new-age services such as Internet Protocol (IP)/Ethernet. As the intensifying datacentre consolidation and wider adoption of cloud computing are significantly raising the bandwidth requirements in datacentres, customers are increasingly opting for Ethernet for datacentre-to-datacentre connectivity and multi-protocol label switching IP virtual private network (MPLS IP VPN) for connecting to smaller branches.

The larger branches that are using MPLS are expected to gradually switch to Ethernet due to the need for faster throughput speeds.

New analysis from Frost & Sullivan, Asia Pacific Enterprise Data Services Market 2010, finds that the market earned revenues of US$13.71 billion in 2010 and estimates this to reach US$27.20 billion in 2017.

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Although high-end MPLS circuits often compete against Ethernet services, they have not made a substantial dent on the former's revenue share. Once Ethernet nodes become more ubiquitous, customers will switch to Ethernet services for speeds in excess of 100 Mbps.

"Regulatory compliance will also have a considerable bearing on customers' purchase decisions. The self-governing nature of Ethernet makes it particularly attractive for sectors such as financial services and government," said Frost & Sullivan Research Analyst Mayank Kapoor.

Although enterprise data services have the benefit of advanced technology, increasing competition and enterprise mobility have hampered their rapid uptake. Growing enterprise mobility has made IP security (IPSec) and secure socket layer (SSL) VPN attractive to small and medium businesses. The mobility factor compels enterprise users to leverage the Internet to connect to corporate networks, and this restrains the growth of private network services.

Further, high-speed broadband initiatives in countries such as Australia, Malaysia, New Zealand and Singapore are likely to accelerate the decline in wholesale prices, which will have a significant impact on the pricing of core data services such as MPLS IP VPN and carrier Ethernet.

"Nevertheless, market participants can take heart from the sound economic growth of the Asia Pacific. With the region expected to be the growth engine for global economy, the enterprise data services market is expected to experience a compound annual growth rate of 10.3 per cent in the next seven years, largely powered by China and India," noted Kapoor.

This robust economic health is likely to attract large investments to the market and keep it buoyant.