According to a new report by Frost & Sullivan the European MPLS/IP VPN market earned revenues of more than $7.02bn in 2014 and estimates this to reach $14.63bn in 2020 at a compound annual growth rate of 13%.
"MPLS has higher flexibility and scalability than other networking technologies," said Frost & Sullivan Digital Transformation Research Analyst Shuba Ramkumar.
"With MPLS, it is easier for customers to add new sites to their existing networks thereby enabling any-to-any connectivity.
"Additionally, as MPLS/Internet protocol virtual private network (IP VPN) services are fully managed by the service provider, enterprises do not have to deal with the challenges of routing and managing complex networks.
"With customers migrating to MPLS VPNs, focus is increasing on tools that monitor network and application performance.
"These tools are critical for successful MPLS/IP VPN implementation as customers seek greater transparency over the applications they wish to run on the network."
Although MPLS/IP VPN has proved a winning combination, the economic advantage offered by standalone IP VPN, along with the opportunity it provides to enable additional security, is expected to emerge as a competitive threat to MPLS VPN, noted Ramkumar.
"In locations where Ethernet is available, it is emerging as a viable option for enterprises' any-to-any connectivity needs," added Ramkumar.
"Nevertheless, the ability of MPLS/IP VPNs to function using any kind of access technology, unlike virtual private local area network (LAN) services (VPLS) that require Ethernet in all locations, has been crucial in reducing the effect of VPLS on MPLS revenues. MPLS and VPLS will continue to co-exist in enterprise wide area network (WAN)."
Meanwhile, enterprises have been accelerating the migration of mission-critical applications to the cloud, and this is intensifying the demand for MPLS/IP VPN connections.
Service providers are capitalising on the growing need for secure cloud connectivity by building secure MPLS-based network connections into internal or third-party data centres.
"Secure access to cloud services is central to ensuring reliable cloud environments," added Ramkumar. "Being a managed private network, MPLS/IP VPN is the preferred mode of cloud connectivity for enterprises."