Ovum: Optical network equipment sales swooning so far in 2012

Market research firm Ovum reports optical network hardware vendors have some catching up to do if 2012 is to see any growth in the sector.

In the newly released Market Share Alert: 2Q12 Global ON, Ovum researchers say that global optical network equipment sales have slipped significantly overall during the first sixth months of 2012. The disappointing global performance comes in spite of the fact that sales grew 6% in Asia-Pacific and 19% in South and Central America in the second quarter.

“Preliminary analysis of 2Q12 offers more reasons for concern,” according to Dana Cooperson, vice president and practice leader of network infrastructure at Ovum. “Global spending in the quarter dropped 8% compared with 2Q11 to $3.8 billion. This is the second year-over-year drop in a row. The global decline was mainly driven by spending softness in North America and EMEA, each down 19% to $876 million and $950 million, respectively.”

Ovum’s assessment echoes that of Dell’Oro Group, which issued its findings earlier this week (see “Dell'Oro: 2012 optical transport equipment market shrinking”).

As the third quarter traditionally has been soft in the optical network hardware market, hopes for a rebound rest on a strong final quarter. “It will be very challenging to make the 2% growth we’ve predicted for the year, although as Asia-Pacific and SCA become a larger part of the global market, spending is shifting strongly to the fourth quarter,” Cooperson commented. Ovum earlier had predicted 4% growth for the year (see “Ovum: Bad first quarter for optical network hardware sales”).

Cooperson takes a dim view on near-term recovery in the two lagging regions. “With 1H12 behind us, we are trending toward our pessimistic scenarios in North America and EMEA. Despite good prospects in Asia-Pacific and SCA, this was not sufficient throughout the first half of the year to push the global market to growth. Prospects in the eurozone have not yet improved and are unlikely to turn around quickly. Prospects for North American Tier 2 carriers are improving, but any growth in spending may not make up the gap for vendors that depend on spending by the largest carriers.”