July 10, 2024

Impact of IPv4 Address Market Trends on Small and Medium Enterprises (SMEs)

The Internet is the backbone of any business today, and for SMEs looking to grow, a strong online presence is necessary. It also goes without saying that the role of Internet protocol (IP) addresses is as important, because any device used to connect to the Internet needs one, and since the development of the Internet, IPv4 has been the standard—this is a bit of an issue, though. 

You see, IPv4 addresses do not go to infinity and beyond like Buzz Lightyear; they are a finite resource. And with more people using the Internet, IPv4 addresses have become scarce and, quite honestly, expensive. So, how does all this affect small and medium enterprises (SMEs)? This is what we’re here to break down for you. So, shall we?

IPv4 Address Shortage

Before we dive into the details of it all, you must first have a basic understanding of the issue arising. IPv4 addresses are composed of 32 bits, allowing for approximately 4.3 billion unique addresses—can you imagine this number of IPv4 addresses is almost used up? The rapid addition of internet-connected devices, such as phones, tablets, and IoT devices, quickly exhausted the available pool of IPv4 addresses. 

As you can gather, this is now a challenge for small businesses; getting a new IPv4 address is costly and challenging.

What are IPv4 Addresses Market Trends?

The following are market trends caused by IPv4 address scarcity:

Limited Growth

This means that SMEs cannot increase their online presence as a result of the shortage of IPv4 addresses, hence their inability to provide new web services, increase the number of users, and implement cloud-based solutions.

Rising Costs

We’ve mentioned this earlier: IPv4 addresses are finite, and devices connected to the Internet are infinite. It’s a rule in any market, right? The more scarce a product, the more it costs. This shortage of IPv4 addresses has driven up their market value. The prices of IP addresses have been increasing over time; on the secondary market, entire blocks are sold for thousands of dollars. 

This increased pressure on the IT budget of SMEs will raise the need to make difficult choices between necessary services and acquiring additional addresses.

IPv6 Demand

Due to the ever-increasing cost and difficulty of acquiring IPv4 addresses, there is a drive and rush for the implementation of IPv6. IPv6 addresses are 128 bits long and would, therefore, be able to provide quite a number of unique addresses that can be termed almost infinite. 

However, several challenges limit the transition to the use of IPv6. For instance, this will require infrastructure upgrading, which may necessitate a huge investment in terms of cost and time for an SME. Even though the benefits of using IPv6 are long-term, the initial investment discourages many smaller enterprises from using it.

IPv4 Leasing Markets

In response to the shortage in IPv4 supply, leasing markets have emerged so that businesses can lease IPv4 rather than buy it. This can be good news for SMEs since it offers a more flexible and cost-effective solution. Leasing can, therefore, provide temporary relief while transitioning to the use of either IPv6 or managing the immediate IP address needs of businesses.

IPAM Services

Largely driven by complexities in IP address acquisition and management, there is certainly a market for IP address management (IPAM) services; this will make it possible for companies to effectively allocate, manage, and track their IP addresses. On the other hand, should an SME decide to outsource the management of its IP addresses, it would reduce the internal IT burden and guarantee total compliance with regulations.

Security Concerns

If one IPv4 is used for too many purposes, it may introduce security issues. SMEs with limited addresses might struggle to implement proper segmentation for secure operations.

What is the Impact on SMEs?

The whole deal with IPv4 addresses and their scarcity has a domino effect on SMEs:

• The rising costs of IPv4 addresses are causing financial strain for SMEs, and the increased expense of IP addresses can divert funds from other critical areas such as R&D, marketing, or hiring.
• SMEs may face difficulties in expanding their networks or deploying new services if they cannot obtain the necessary IP addresses, causing operational challenges.
• Transitioning to IPv6 is a daunting process for SMEs, although it’s inevitable. This is because upgrading network infrastructure, ensuring compatibility with existing systems, and training staff are very costly and time-consuming.
• A competitive disadvantage arises, no thanks to IPv4 address scarcity. Larger enterprises with more substantial financial resources can navigate the IPv4 market more effectively, unlike SMEs, who may struggle to keep pace with the technological advancements and network expansion of their larger counterparts.

What are Suggested Coping Strategies for SMEs?

However daunting the issue of IPv4 addresses may seem, there are always ways to go about it. Here’s what SMEs can do to cope:

Embracing IPv6 Early

We know, we know. Transitioning to IPv6 might be a bit of a hassle, but it comes bearing gifts. SMEs that proactively adopt IPv6 might have an advantage in terms of future-proofing their networks against their competitors. Additional advantages of early adoption include higher security, better performance, and improved support for IoT devices.

Leveraging IPAM Services

To a large extent, the pressure on SMEs can be reduced by outsourcing IP address management to some specialized service providers that bring experience and know-how in efficient management, adherence to regulatory requirements, and network performance optimization. This way, SMEs can focus on their core business activities.

Participating in IPv4 Leasing Markets

IPv4 leasing markets provide flexible solutions for SMEs. This is a cost-effective alternative to purchasing that allows SMEs to meet their needs without incurring significant upfront costs.

Going for Cloud-Based Solutions

Large pools of IPv4 addresses are usually maintained by cloud providers. SMEs can hence relocate some of their services to the cloud and use their infrastructure without worrying about address acquisition.

That’s all, tech savvies! The shortage of IPv4 addresses and related market trends are full of challenges and opportunities for SMEs. However, by understanding market trends and deploying strategic solutions, organizations will be able to overcome the challenges and ensure continuous growth online.

Reach out to IPv4Mall if you want to buy, sell, or lease an IPv4 address!