Optical Network Hardware Market Remains Unscathed by Economic Downturn

A recent report by Infonetics Research indicated that the worldwide sales of metro and long haul WDM (wavelength division multiplexing) and SONET/SDH optical network hardware decreased by eight percent to $3.8 billion between second quarter of 2008 and third quarter of 2008.

 

Infonetics, in its report entitled, “Optical Network Hardware,” forecasted that there will be a 23 percent increase in worldwide WDM optical equipment sales for the year, CY07 to CY08. The report also forecasted that there will be a continued gradual decrease in SONET/SDH equipment sales, for the reason that an increasing amount of service providers are intending to multiply their bandwidth capacity and as well increase bit rates using WDM technology.

 

The report also indicates that there was an increase in the packet optical transport system (POTS) equipment segment by a mere four percent in the third quarter of 2008, which now represents 12 percent of the overall optical network hardware market. The research firm anticipates that the worldwide POTS equipment manufacturer revenue will further grow annually through at least 2011.

 

The report also shows that there will be growth in overall optical network hardware market with a figure of $16.4 billion - in 2011. In addition, WDM spending will increase by up to 20 percent year-over-year from third quarter of 2007 to third quarter of 2008. The present WDM portion of optical network hardware spending is likely 49 percent, says the research firm.

 

The report results show that there is a race for metro WDM ROADM revenue and it is getting increasingly competitive each quarter as more manufacturers enter the market and service providers deploy metro ROADM gear. At present, Cisco (News - Alert) maintains its metro WDM ROADM revenue lead, but there is a one-point consecutive difference between the next four companies that include Fujitsu, Huawei, Tellabs, and NEC (News - Alert).

 

According to the Infonetics report, the long-time market leader Alcatel-Lucent (News - Alert) increased its overall optical network hardware revenue by one percent in the third quarter of 2008, where as NEC increased its optical revenue by a whopping 26 percent in the third quarter of 2008 - as it continues fulfilling a build out in Japan.

 

Michael Howard, principal analyst at Infonetics Research (News - Alert), said, “As it looks today, the effect of the general economic downturn likely will be minimal on the optical network hardware market, because consumers and businesses continue to demand more bandwidth—even if at a somewhat slower pace—for video applications, mobile traffic, gaming, and other bandwidth-intense applications. As traffic pressures continue to mount, service providers continue to undertake IP transformation projects and invest in optical equipment, and increasingly so in WDM versus SONET/SDH, with the end result of a very slowly increasing optical network hardware market.”

 

Infonetics’ quarterly optical report has kept track of companies such as ADTRAN, Alcatel-Lucent, BTI, Cisco, Corrigent, ECI, Ericsson, Fujitsu, Huawei, Infinera, NEC, Nokia Siemens Networks (News - Alert), Nortel, Tellabs, Turin, ZTE, Xtera, and others.

 

The company also said that this report primarily offers global and regional market share, market size, and forecasts for metro and long haul optical equipment, including SONET/SDH (transport, MSPPs and crossconnects), WDM (ROADM and DWDM/CWDM transport), and POTS. The report also offers global and regional port-by-speed data and analysis for Ethernet, SONET/SDH/POS, and WDM ports.