Legacy networking technologies, particularly TDM private lines, frame relay, and ATM, are declining rapidly in Australia and New Zealand and are being replaced by IP VPN and wide-area Ethernet network services.
MPLS has matured and is currently the main WAN technology for large enterprises in Australia and New Zealand (ANZ). In our recent survey of large enterprises we determined which network services and technologies are now being adopted, and what expectations large enterprises have of their providers.
The enterprise Ethernet market in ANZ is still in an early stage of its lifecycle in comparison to other developed regions. Only 11% of the large enterprises we surveyed currently consider Ethernet (private lines or VPN) as their main WAN technology.
Competition in the Ethernet market is still weak in comparison to more mature technologies such as MPLS (main technology for 41% of the companies), which may be restricting its attractiveness and slowing its uptake. However, expectations of adoption are high, and 24% of large enterprises expect to have Ethernet as their main WAN technology in two years. This suggests that these enterprises expect more mature offerings to emerge in this market.
This high expected growth represents a great opportunity for service providers, but they must remain aggressive on customer acquisition. The first-mover advantage is key, because enterprises are looking for long-term relationships with their network service providers, and want to avoid the cost and disruption involved in breaking contractual obligations.
On the other hand, the importance of IPSec VPN in ANZ is higher than most other developed regions and likely will persist for longer. 21% of the larger enterprises in ANZ still consider IPSec their main technology.
Compared to Europe, enterprises in ANZ are likely to have more sites located at remote areas that are not served by MPLS or Ethernet nodes. As a result, IPSec is still widely used, and will continue to be deployed as a geographical reach alternative, redundancy option, and for offloading less critical or less time-sensitive applications.