ACG: Optical market shrank in 2010

By Stephen Hardy -- Despite finishing strongly in the fourth quarter, the optical network equipment market had a down year in 2010, Eve Griliches, managing director of market research firm ACG Research, told Lightwave in an interview last week. However, Griliches does expect growth to resume in 2011.

By Stephen Hardy -- Despite finishing strongly in the fourth quarter, the optical network equipment market had a down year in 2010, Eve Griliches, managing director of market research firm ACG Research, told Lightwave in an interview last week. However, Griliches expects growth to resume in 2011.

Griliches pegged 2010 optical network equipment sales at approximately $12.3 billion, a 2.1% decrease from 2009. She cited price pressures, supply chain issues early in the year, and carriers running out of money in the latter part of 2010 as factors that retarded growth.

Nevertheless, Griliches did see highlights.

“The enterprise market came in at over $1 billion, so I think that was certainly a bright spot,” Griliches offered. “The Chicago to New York City, new fiber being laid, new systems being laid – this whole advent of the hedge funds and low-latency trading has certainly helped in the financial sector. And I also think that healthcare is also a very growing vertical, mainly through managed services for a lot of the service providers.” Content providers also spent significantly in 2010, she added.

These content providers and growth in cloud-based services should drive single-digit expansion this year and into 2012, Griliches believes. “I think the content providers are going to probably increase what they’ve spent this past year somewhere between 40% and 50%, so we could see another big surge on their part – depending upon how available the 100-gig optics and systems are,” she says. “And I’m really thinking 12 months from now; I don’t think we’re going to see that much in the next three, maybe six months, but probably the six months after that we should see more. So it may not fall exactly in this calendar year.”

Healthcare providers also should spur optical network equipment spending, Griliches says.

The complete interview with Griliches can be found in the upcoming March/April 2011 issue of Lightwave.

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