Managed IP Services Market to Top $41 billion

An interesting study released this morning by Cisco (CSCO), has bullish implications for Internap (IIP).

In the press release, Cisco highlighted a study by Ovum, that concluded that the managed-services IP market is expected to reach $41.5 billion per year by 2009.

"More and more business customers want service providers to deploy and manage their network solutions to reduce costs and improve reliability," said Peter Hall, Research Director, Ovum. "Significant opportunities exist for service providers developing and delivering managed services, especially in the areas of multiservice IP VPN, IP communications, security and Metro Ethernet."

Other key findings from the Ovum study include the following:
    * Network security is the most commonly adopted IP service.
    * By 2009, managed IP VPN will remain the largest portion of the market (53 percent) but managed voice over IP (VoIP) will grow the fastest (65 percent compound annual growth rate (CAGR)).

What does this have to do with Internap (IIP)? Through its data centers, IIP provides a full range of Managed IP (including VPN) services (visit Internap.com for a full list).  With its strong customer base, IIP has an excellent opportunity to upsell these managed IP services to existing clients and drive revenue growth over the next 3 to 5 years. The value of Internap is in its client base. Management now needs to execute to upsell new services to existing clients. Interestingly, IIP's co-location business is growing nicely, which is proof of the company's ability to leverage its customer base and technology to provide higher margin IP services. Management, though, needs to move faster in introducing and marketing the company's full range of IP services.