2007 was a healthy year for business services online. Revenues from broadband business services grew by 47% during the year to reach a run rate equivalent to US$22.8 billion per year by December, according to Point Topic.
Security still tops the league in revenue terms, but there has been real growth in IP-VPNs as companies around the world migrate their private networks to an IP-based solution. They are also exploiting the improving functionality and lower costs of IP VPN solutions to implement new links and networks.
Figure 1: Selected business services - annual revenue rate ($m)
|Applications||End 2006||End 2007||% growth|
|Voice over IP||1,088||1,497||38%|
IP-VPNs did very in 2007, but that could be the high point for the moment. A good proportion of private networks already functioning over IP: the economic pressure on companies in 2008 and projected for 2009 will make growth much more difficult.
Three areas could do well in this environment though. VoIP which can make significant savings for an organisation and is maturing into a business grade application and should see solid and increased growth.
Remote back-up, which grew at over 60% in revenue terms in 2007, becomes much more realistic where up-stream speeds are high and will partly be driven by the increase in synchronous and near-synchronous broadband solutions that are rolling out.
Then there is application service provision or SaaS (software as a service - aka or ASP for application service provider) is likely to be a major growth area in the next 12 to 24 months, for several reasons.
At the same time the ever growing cost and complexity of running and maintaining all applications on site and the relatively seamless access enabled by broadband means that ASP makes increasing sense for business customers and suppliers. Even the notoriously net-shy Microsoft has started to make Outlook and SharePoint available for a monthly fee.
The revenue per company that uses the service is high, around $1,500/month at the end of 2007, suggesting firms are willing to pay for applications to be delivered on demand. The relatively low number of end users indicates plenty of headroom for growth. The high average also shows that some fairly large organisations now use applications running on-demand in the browser.
Perhaps most importantly, the convergence of the will and the technology seems to be coming closer. The cloud is becoming an increasingly serious proposition with companies like SalesForce and Google making headway and earning serious revenues from it.
The difficult financial situation means that it's a different world from 12 months ago, but there is still growth in revenues, users and profits in play. Broadband growth will slow in the recession, but there will still be growth in the industry, both in terms of lines and services.
From a customer perspective, the cost savings on offer when implementing many of the services enabled by broadband will prove too tempting to ignore for many companies in the coming months.
John Bosnell, senior analyst, Point Topic.