For the first time in two years, businesses are planning to increase their spending on networks. The options available from suppliers have changed profoundly since the last time IT directors had money to spend on this infrastructure.
Cisco, the dominant force in the sector, faces challenges from a host of newer players pushing high-tech offerings and from 3Com, which re-entered the router market last week. The result may be price wars and efforts by suppliers to differentiate themselves by offering additional services.
Market surveys offer evidence that firms are ready to build infrastructure for future growth.
Kew Associates, which surveys 60,000 UK IT budget holders twice a year in exclusive research for Computer Weekly, found that spending on networking equipment and telecoms services was set to grow by up to 10% over the next two years. Market research group Datamonitor expects global spending on virtual private networks and firewalls to almost double, rising from £1,643bn in 2002 to £2,720bn in 2006.
A report from investment bank Goldman Sachs on Cisco last month said, "For the first time in recent surveys, data networking spending priorities have moved to the 'highest' category."
However, this does not mean the dam on network spending has completely broken. Gartner analyst Mark Fabbi said, "We recently surveyed our clients about their networking concerns. Nearly two thirds cited budget issues as a high priority. It is clear that enterprises are now demanding a very short-term return to justify investment in new technology."