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SAN Services Key to Ethernet Market

Metro service providers will need to offer SAN and other value-added services to mine market

Metropolitan service providers that have managed so far to weather the economic downturn are best positioned to tap the emerging market for Ethernet services. But they'll have to add value in order to win. And storage networking will be among the key offerings.

So says a recent report from The Yankee Group, which predicts that value-added retail services based on Ethernet will make up $2 billion out of a total $4 billion market for Ethernet services in the U.S. by 2006.

Figure 1:
Source: The Yankee Group

"We expect several value-added services will see explosive growth in the next three to four years, including storage-area networks, IP VPNs [virtual private networks], and content delivery," writes Yankee senior analyst Nick Maynard. "Although other value-added services like [voice over IP] and video conferencing will be an important part of the overall product strategy, they will not be long-term drivers of significant revenue growth for Ethernet providers."

The report cites the following key players: Cogent Communications Inc., FiberCity Networks Inc., GiantLoop Network Inc., IntelliSpace, XO Communications Inc. (Nasdaq: XOXO), and Yipes Communications Inc. These are carriers Yankee identifies as the "survivors of the metropolitan provider shakeout."

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