Optical equipment market ends 2013 with a thunk says Ovum

Corroborating earlier reports (see “2013 optical hardware sales end year on flat note says Infonetics”), market research and analysis firm Ovum says that the optical network hardware market ended what turned out to be a down year in 2013 with a down fourth quarter. Optical equipment sales fell 5% sequentially and 10% year-on-year, leaving the space with a 1% annual decline for the year. However, 2014 sales should show improvement, the company predicts.

Sales of optical network equipment totaled $3.5 billion for 4Q13 and $14.5 billion for the year. Europe, the Middle East, and Africa (EMEA) and South and Central America (SCA) showed signs of the usual fourth quarter uptick, Ovum reports; EMEA revenues topped $1 billion for the first time in 12 months while the SCA market exceeded $300 million for the first time in 2013. But declines in North America and Asia-Pacific were too significant to overcome. Quarterly revenues from the Asia-Pacific market reached their lowest level in almost two years, Ovum reports.

“The 2013 market ended with a whimper rather than a bang; the Asia-Pacific market did not rebound off of a weak 3Q,” explains Ron Kline, principal analyst, network infrastructure at Ovum. “Market woes are a result of substantial declines in demand for legacy TDM aggregation gear and in continued spending softness in China.”

The decline in demand for legacy equipment, such as SONET/SDH platforms, heralds a switch to newer systems technology. “On the bright side, more than half of all spending in 2013 was for next-generation CPO [converged packet optical] gear, and the 100G market moved into generalized deployment, climbing past $2 billion for the year, and we have already seen the first field deployments of 400G,” Kline offered. “From a technology perspective 2014 looks equally exciting as gridless ROADMs and metro-optimized 100G solutions enter the market.”

The interest in such newer technology – sales of CPO platforms exceeded $7.4 billion last year – should prove beneficial to the market overall, reversing the downward momentum of 2013. Ovum currently forecasts that equipment sales for 2014 should show 2% growth.

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