Optical Network Equipment Market Experiences Steady Growth, Expected to Increase

An increasing number of non-service providers in finance as well as government sectors are now buying more optical gear, according to a report by Infonetics Research.

 

The report entitled “Optical Network Hardware by Vertical Market” shows that non-service provider invested one of every seven dollars in optical equipment. This creates a growing opportunity for optical network equipment vendors.

 

The updated research report that was released last week provides global as well as regional information containing market size, forecasts, and analysis for wavelength-division multiplexing (WDM) and synchronous optical networking (SONET)/synchronous digital hierarchy (SDH) optical network gear, which are used in metro and long haul networks.

 

Michael Howard, principal analyst at Infonetics Research (News - Alert), said, "Non-service provider verticals as a whole, and the finance and government sectors in particular, are buying more optical equipment, both for long haul and metro deployments. Their optical equipment purchases are being driven by the need for high capacity, highly available storage extension, data center interconnection for businesses, and secure transmission. There are a lot of interesting applications being used by the government, education, finance, and utility sectors for which they buy their own optical equipment and these will continue to grow over the next few years."

 

During research period, the research firm tracked 12 vertical markets relating to service provider and non-service provider, in all world regions. The service provider verticals were broken into four categories that included incumbent telco and mobile operators, competitive telcos, cable operators/ multiple system operators (MSOs), and Internet content providers (ICPs), while  non-service provider verticals were broken into eight categories that included education and research, government, finance, healthcare, media and entertainment, transportation, utilities, and other.

 

The original report, which was released in March 2008, indicates that the amount of money Internet content providers (ICPs) spent on optical network hardware worldwide hit $204 million in 2007, and anticipated to grow steadily over the next five years. The original report also indicated that 86 percent of the 2007 $13.9 billion optical hardware market came from service providers, with the bulk coming from incumbent telcos and mobile operators, as well as cable operators (particularly MSOs in North America), and ICPs.

 

The updated report includes actual and forecasted revenue for all 12 verticals by metro WDM, metro SONET/SDH, long haul WDM, and long haul SONET/SDH optical equipment. The report highlights that the service provider investment in optical network equipment continues to be driven by IP network transformation projects as well as growing traffic from business services, residential triple play, and mobile backhaul.

 

Majority of optical network equipment is purchased by service providers, with incumbent telcos and mobile operators making up close to two-third of all service provider optical purchases, says the report.

 

The updated report also indicates that ICPs such as Google, Yahoo, and MSN are expected to increase their spending on optical network hardware by 10 percent from 2009 to 2011, worldwide. The report also highlights that metro WDM optical equipment is a fast growing area of investment for non-service provider verticals, especially finance and government.