Despite last year's dip in sales for business data services, networking and convergence resellers look set to profit from a five-year growth period, according to research firm Analysys.
Revenues for European business data services will grow by four per cent year on year, from 23bn euros in 2003 to 28bn euros in 2008, Analysys said in its Business Data Services: growth opportunities and forecasts 2003-2008.
It predicted enterprises will migrate data services from leased lines, ATM and Frame Relay to invest in IP VPNs, Ethernet and Digital Subscriber Line (DSL) technologies. This will provide resellers with a chance to focus on selling more converged voice and data services.
IP VPNs will be the fastest- growing service in 2004, witnessing a 40 per cent revenue growth, according to the report. But over a five-year period (2003-2008) Ethernet will have the highest growth rate, at 42 per cent.
A growth in web-based tools, email, and converged voice and data applications, will drive demand for enterprise-wide IP connectivity, said Margaret Hopkins, author of the report.
While financial services firms continue to be the leading innovators, resellers also will benefit from other industries updating their communications infrastructures.
Greater availability of broadband means the channel will be able to target the SME market, as remote backup and combined voice and data products become more affordable.
But with enterprises shifting to IP-based services, the market will see a decline in traditional networking products, such as leased lines and ATM, with Frame Relay revenues falling by 26 per cent yearly, Analysys said.
"Enterprises are moving to IP and web-centred data systems, and IP VPNs provide a more flexible technology for the same price or cheaper than traditional connectivity," Hopkins said.
The analyst firm said DSL sales are growing through its use as an access tool in corporate networks by remote and home workers, with its asymmetric design making it suited to retail distribution applications.
But Analysys added that differences in DSL technology, speed and price means it will not be suitable for converged voice and data applications across all of Europe.
Craig Thomas, marketing director at Tiscali, said he is seeing a massive investment in IP and Ethernet technologies, and from firms looking to replace legacy Frame Relay and ATM networks.
"These new technologies are levelling out the playing field for companies. They can now justify the investment in technologies such as WANs," he said.
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