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The purpose of this article is to identify how Internet Protocol Virtual Private Network (IP VPN) affects the business strategy for Taiwan Internet Service Provider, using X Company as an example. With the change in technology, the world’s business environment change from day to day. The break though development such as Internet Protocol Virtual Private Network, create a whole new era of communication. With the pressure coming from both the fixed network carrier (Type 1 telecommunications enterprises) and the existing Internet service provider competitors. X Company needs to find a new market niche to maintain its competition.

Strategy becomes most important when the existing business model is coming into a mature stage. A partnership with other service carriers or an innovation within the same business filed becomes the crucial decision. Through X Company’s internal data, this thesis will analyzed the strength and weakness compare to its current competitors. With the data from the customer survey, X Company can also identify the need of its customers.

At the end, this thesis will prove X Company’s trend toward IP VPN transformations is the right strategy. As data traffic expected to outgrow voice traffic in the coming year, X Company’s transformation to IP-based Virtual Private Networks is the right strategy. IP VPN setup will be the trend of increasing dependence on the corporate network as a way of interconnecting users with enterprise software, business process, databases, and intellectual capital. Companies are transferring more enterprise applications between sites, as well as data replication and transfer. But enterprises are aiming at the same time to combine the effectiveness of information sharing with the network with the need to make sure security, manageability, functionality and privacy while being paying attention on cost control. X Company IP VPNs offer a more reasonable mean of doing so without the necessity for expensive leased line dedicated connections.

Chapter 1. Introduction p.01
1.1 Background p.01
1.2 Research Purpose p.01
1.3 Research Process and Framework p.03
1.4 Research Limitations p.03

Chapter 2. Literature Review p.04
2.1 Innovation Theories p.04
2.2 First Mover Advantage p.06
2.3 Global Strategic Partnerships p.07
2.4 Pareto's Principle: The 80-20 Rule p.08

Chapter 3. Greater China Market Overview p.10
3.1 Greater China Market Overview p.10
3.2 Taiwan Market Overview p.17
3.3 China Market Overview p.31

Chapter 4. Case Analysis: X Company p.47
4.1 Financial Review p.48
4.2 Innovation p.49
4.3 First Mover Advantage: Expanding geographical scope of network p.51
4.4 Global Strategic Partnership p.52
4.5 Business Objectives and Strategy p.55
4.6 Customer Survey: Market segmentation p.57
4.7 Survey result p.59
4.8 Survey Conclusion p.64

Chapter 5. Conclusions and Suggestion p.65

Reference p.67

Appendix p.69

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Figures and Tables

Figure 1. Framework p.03
Figure 2 Internal Corporate Demand p.10
Figure 3 Taiwan based Corporation with direct investment in PRC p.18
Figure 4 Service Provider Profiles p.22
Figure 5 Taiwan IP VPN Services Revenue Forecast, 2001-2006 (US$M) p.31
Figure 6 People Republic of China IP VPN Services Revenue Forecast 2001-2006 (US$M) p.46
Figure 7 X Company Global ISVPN Network p.47
Figure 8 X Company Global Network Backbone p.48
Figure 9 MPLS VS FR/ATM/IP Tunnel p.49
Figure 10 Cost and complexity of FR/ATM network p.50
Figure 11Cost and complexity of MPLS network p.50

Table 1 Taiwan IP VPN Services Connections and Revenue Forecast, 2001-2006 p.30
Table 2 China IP VPN Services Connections and Revenue Forecast, 2001-2006 p.46
Table 3 Financial Review p.48
Table 4 Customer Survey p.57
Table 5 Is your company satisfied with our current service? p.59
Table 6 What is the purpose for the use of our current service? p.59
Table 7 Is the current bandwidth enough? p.60
Table 8 Is your company using other leased lines? p.60
Table 9 Is your company using other Internet related services? p.61
Table 10 Does your company has plan to add additional Internet service within 6 months? p.62
Table 11 Does your company planned to buy IP hardware within six months? p.62
Table 12 Related to Internet product promotion, what does your company preferred? Gift or added value service? p.63

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