Network equipment vendors will start offering extended service and support contracts as sales of networking products drop and companies try to maintain their current infrastructures, according to a report from research company International Data Corp. (IDC).
The economic downturn has caused many companies to put infrastructure projects on hold, and vendors are feeling the pinch. However, there is a potential revenue stream for them in offering on-site and remote support services, IDC said.
Worldwide spending on network support contracts has risen by US$2.1 billion to $8.4 billion in 2000, IDC said, and the research company expects the figure to reach $14 billion by 2005.
Most of the growth will come from remote diagnostics, with an expected compound annual growth rate (CAGR) between 2000 and 2005 of 14.9 percent, and electronic support at a CAGR of 20.6 percent, the report said.
In comparison, the CAGR for on-site support is expected to be only 8.2 percent.
The downturn is not evenly spread across the networking market, said IDC, and some areas are likely to see double-digit growth this year. These include converged private branch exchanges (CBX), softswitch and gateway products, IP (Internet Protocol) VPN (virtual private network) products, and optical devices, IDC said.
IDC is a subsidiary of International Data Group Inc., the parent company of IDG News Service.