Yankee Group Identifies Market Driver for Enterprise VPLS; Growing Enterprise Network Complexity Key to VPLS Growth

Business Wire, March 13, 2006

BOSTON -- Yankee Group today announced the key element necessary for service providers to position virtual private LAN service (VPLS) for dramatic growth: the ability to dramatically decrease enterprise network complexity. According to the Yankee Group 2005 Enterprise Communications Survey, US enterprises have an immediate need to simplify network management. Driven by the convergence of multiple applications, enterprises increasingly demand differentiated service levels, which drives unparalleled levels of network complexity. Although VPLS is in its infancy, enterprises are growing more receptive of it as an important solution in overcoming their network management challenges.

Balancing the alignment of strategic objectives with potentially higher costs remains a fundamental challenge to enterprises. That, coupled with the challenge to overcome the complexity and cost of legacy services, is driving enterprises to adopt managed IP VPN solutions for greater simplification of their networks with better scalability, reliability and flexibility. However, adoption of managed VPNs is tempered by enterprises' hesitance to outsource their routing tables. VPLS alleviates this concern because enterprises are not required to share their routing tables, and instead it catalyzes the existing strong demand for managed IP VPN services.

"There is tremendous opportunity for VPLS to address and solve enterprise network complexity," said Yankee Group senior analyst Josh Holbrook. "Service providers that highlight the advantages of VPLS at this ripe time will have a distinct edge in building leadership in this untapped, yet profitable market."

Because migration from legacy WANs to MPLS-based VPNs remains a strategic goal to enterprises in bringing down legacy costs, adoption of VPLS will be influential in helping to deliver easy-to-use services and applications that support business objectives. Although the role of VPLS in the market is yet to be crystallized, the certainty of it as a solution to overcoming network management challenges is unquestionable.

YANKEE GROUP (www.yankeegroup.com)

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