News Release

Europe's Enterprises Could More Than Double Spend on IP Services Over Next 24 Months if Service Providers Go-To- Market Effectively, Says Survey Commissioned by Cisco Systems from IDC

Adoption of Both CPE and Network-based IP VPN Services Set to Grow by +60%
May 21, 2002

PARIS, France, May 21, 2002 -- Cisco Systems Inc., the worldwide leader in networking for the Internet, today announced the results of a European-wide survey it commissioned from analyst group IDC on the type of Internet based (IP) services enterprises are looking to adopt over the next 24 months.

The survey, entitled 'SP-Enterprise Connect' asked 415 enterprises with 250 or more employees how receptive they would be to using a service provider for the delivery of IP services as opposed to building and managing them in-house. Countries surveyed included France, Germany, Italy, Spain, Sweden, Switzerland and the UK. Services covered were IP VPN and mobile VPN, Metro Optical, IP Telephony, Security, Content, Storage and Web Hosting.

Results show that enterprise adoption of IP VPN services will grow 60% over the next two years. Web hosting and storage are also likely to be popular services with 48% and 39% adoption rates respectively over the same timeframe. Nearly 20% of enterprises indicated their intention to deploy various types of managed IP Telephony services over the next two years, showing the growing opportunity for managed IP telephony services. Findings show that users are moving into the realm of seeing the benefits of converged services running on an IP platform.

"The survey results reflect what we see happening in the market," said Todd Abbott, Group Vice-President for Service Provider, Cisco Systems EMEA. "Over 25 of Europe's Top service providers are offering an IP VPN service today based on Cisco platforms. What's interesting is that seven of them are also offering an IP Telephony service with us in anticipation of future growth."

"IP VPN is the foundation service that will allow additional services to be offered by service providers, a great example of this is Voice over IP and IP Telephony," said Todd Abbott. "It is likely we will see the deployment of these services accelerate over the next 18 months. Once a secure IP VPN with Quality of Service (QOS) is in place, the cost advantages of installing IP Telephony become compelling. The survey clearly shows that converged voice/data applications, which increases enterprise productivity, will drive IP Telephony growth."

'SP-Enterprise Connect' reveals that all being equal from a cost perspective, more users would choose MPLS than a managed Frame Relay service, which suggests that MPLS-based IP VPNs will overtake Frame Relay-based networks over the next three-five years.

While demand for Metro Optical services overall was shown to be in its infancy, 26% of companies said they were using Transparent LAN over Fiber services, this compared with only 5% that were using Transparent LAN over ATM.

Respondents showed a high level of interest in outsourcing more network and IT functions to service providers, suggesting that many of the traditional barriers to outsourcing are being addressed. The level of outsourcing with organisations surveyed could more than double over the next 24 months. 51% of those companies that outsource or plan to outsource functions covered in the survey cited cost saving as one of the most important drivers.

Cisco is using its understanding of enterprise networks and IP technologies to help service providers drive their revenue growth through the development and deployment of new converged voice/data services based on IP. Cisco is also helping service providers use the Internet to reduce operating expenses and drive the change in their culture required for successful delivery of these services to the market.

This survey is part of a global study covering Europe, US and Asia Pacific. Companies surveyed addressed the following vertical markets: retail/wholesale, manufacturing, government, financial services, media, and travel/transportation.