Once primarily driven by large companies with sophisticated IT staffs, demand for VPNs and firewalls is now coming from every sector of the market. According to Infonetics Research, revenues generated by the sales of dedicated VPN hardware and software climbed 19 percent from first quarter 2001 to second quarter 2001, reaching $535 million in the second quarter. The firewall market climbed 12 percent in the same period, reaching $430 million. According to Infonetics researchers, everyone from home users to large corporations and from hosting and connectivity providers to government institutions wants to use VPN and firewall technology to protect his or her network. International Data Corporation (IDC) sees dedicated VPN/firewall appliances, which combine hardware, software, and networking technologies that provide VPN and firewall functionality, as particularly strong entries in the field.

According to Insight Research, VPN growth should be robust over the next couple of years as enterprises and individuals add more and faster Internet connections such as cable modem and DSL connections. Graph 1 shows the expected increase. To manage the explosion of new users and the complexity of their network elements while assuring reliability, corporations will turn to carriers that are able to provide a managed or outsourced VPN solution.