IDC: Market analysts might have overestimated IPv6 spending

A mandatory transition to IPv6 will mean increased federal spending on information technology, but vendor forecasts might be too optimistic, according to a new market research report.

Shawn McCarthy, research director for government vendor programs at Government Insights, an IDC company, wrote that only a fractional percent of future federal IT spending will be for IPv6. The transition will affect spending in a few IT areas, but most agency spending will be for network planning and configuration management services.

“Beware of unrealistic spending numbers,” McCarthy wrote in the report, “The Real IPv6 Opportunity: Understanding the Strengths and Limits of the Federal 2008 Deadline.”

Agencies will use the largest portion of their IPv6 dollars on IT services, according to the report. In 2010, federal civilian agencies will spend 0.22 percent of their IT budgets on services from vendors, compared with 0.03 percent and 0.04 percent on hardware and software, respectively.

In 2010, the Defense Department will spend about 0.34 percent on services, and about 0.08 percent on hardware and software, the report states.

Government Insights said civilian agencies’ spending on hardware, software and IT services will reach $32.27 million in 2010, an increase from $19.47 million in 2007. DOD may spend $61.43 million in 2010 on the transition, up from $36.12 million next year.

In a separate survey by Juniper Networks, published in November, civilian agency executives reported that they will spend $93 billion on IPv6-related IT purchases by 2011. This fiscal year, agencies anticipate spending $76 billion on such purchases.

The inflated estimates of the IPv6 market include existing markets recast as new spending, McCarthy said. “Many of these analysts are simply looking at all IT spending that may include an IPv6 element…. But this is a very sloppy way to judge the market,” he wrote.

Agencies might find that some servers and routers do not work with IPv6 or a dual stack with IPv4 and will need to increase their short-term spending on upgrade orders, the report states.

McCarthy said IPv6 is a business opportunity, but he warned against betting too much on new IPv6 spending. That use of funds is tightly integrated within existing IT spending patterns, he added.

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