Optical Infrastructure Market: Up 4% in 4Q 2008

The global optical networking market topped $4 billion for the fourth time in five quarters, increasing four percent sequentially, but was down five percent compared to the fourth quarter of 2007, say researchers at Ovum (News - Alert).

 

Spending for the full year was up nine percent over 2007, however, to $16.3 billion.

 

“These results, given the global financial meltdown, were stronger than they could have been, but with annualized spending down sequentially for the first time since the dark days of 2003, the impact of the North American recession is clear,” remarks Ovum’s vice president of Optical Networking, .

 

“Customer budget approval cycles have lengthened and spending is being focused on areas where the path to revenue is quickest and clearest," says Dana Cooperson, Ovum vice president.

 

"Enterprise-related spending has been particularly vulnerable to slowdowns, which has hurt Cisco (News - Alert) among others, while basic carrier optical infrastructure has been more resilient,” she says.

 

Of the top ten vendors, only Huawei (News - Alert) and Ericsson posted positive fourth quarter 2008 results both sequentially and versus the year-ago quarter, Ovum says.

 

Ericsson benefited from mobile backhaul and mixed wireless-wireline builds. Huawei posted sequential and year-over-year gains of 38 percent and 14 percent, respectively.

 

Alcatel-Lucent (News - Alert) held on to market leadership by five share points in 2008 (22 percent share), but faces an increasing threat from Huawei in 2009, Cooperson predicts.

 

The Asia-Pacific market was particularly resilient in the quarter and the year. Spending in the region overall was up by about 20 percent in the fourth quarter and for the full year. EMEA and South and Central America regions grew eight percent and 12 percent, respectively, during 2008.

 

“North America appears to be the only region where revenues shrank compared with 2007," says Cooperson. Looking ahead, North America and Western Europe remain most exposed to lackluster spending in 2009.

 

At the product segment level, metro and backbone WDM sales and undersea spending were strong compared with 2007, while aggregation declined slightly and bandwidth management was roughly flat, Cooperson notes.