August 27, 2004 San Jose, CA -- Worldwide optical network hardware revenue increased 3% between 1Q04 and 2Q04, with slow growth projected through 2007, according to Infonetics Research's quarterly worldwide market share and forecast report, Optical Network Hardware. PON optical line terminal (OLT) revenue is expected to continue its fast growth, increasing 85% between 2003 and 2004, with a major chunk coming from Verizon and NTT, according to Infonetics' PON Hardware report.
Metro optical hardware now makes up nearly three-quarters of all optical network hardware revenue, while long haul continues to decline. The main drivers for metro spending are increased corporate network traffic and storage networking, consumer broadband, and service provider wireless network backhaul. Metro networks will remain the focus in general for some time worldwide. All metro categories are growing, except legacy SONET/SDH, which is declining fast; carriers will virtually stop buying legacy and buy only intelligent SONET/SDH gear by 2007.
"Worldwide metro WDM revenue increased 9% between the first and second quarters of 2004, and we project strong growth through 2007," said Michael Howard, principal analyst of Infonetics Research. "SuperComm 2004 marked the beginning of the ROADM era [remotely reconfigurable OADMs], as many WDM manufacturers announced products or partnerships. ROADM-fitted equipment allows carriers to think of WDM in a new way -- as a flexible, quickly provisioned ring-mesh transport layer, which we believe will positively affect use, sales, and deployments of WDM, with revenue impact in 2005.
"Asia is the major action point for PON, where NTT West in Japan continues with its BPON rollout, and tens of thousands of PON subscribers deployed APON and EPON in 2003 and 2004. NTT East and Yahoo Broadband plan to start rolling out EPON later this year," he concluded.
2Q04 Optical and PON Market Highlights included:
- Alcatel is the worldwide optical network hardware revenue market share leader, followed by second-place Nortel, then Fujitsu and Huawei, who are tied for third.
- In the emerging metro WDM category, Nortel continues to lead, and Cisco now ties ADVA for second after three quarters of advancements.
- SONET/SDH is the mainstay optical technology worldwide, making up 68% of optical equipment sales
- Intelligent optical network hardware increased its share of total optical network hardware revenue to 87%, while legacy continues its decline.
- PON is slowly lifting off in North America, where most activity has been in greenfield home development, city/county/utility overbuilding, and some IOC rollouts to small/medium businesses.
- Over one-third of all optical network hardware revenue comes from EMEA; just under a third each comes from Asia Pacific and North America, and the remaining from CALA.
- Almost half of all metro PON OLT revenue comes from Asia Pacific, and 39% from North America; by 2007, North America's share will increase to make up over half of all revenue.
The Optical Network Hardware and PON Hardware reports track SONET/SDH, CWDM/DWDM, and PON hardware. Forecasts and regional market share are updated quarterly and cover all regions (worldwide, North America, EMEA, Asia Pacific, CALA). Companies tracked in this service include ADVA, Alcatel, CIENA, Cisco, Fujitsu, ECI Telecom, Lucent, Lumentis, Marconi, Movaz, NEC, Nortel, Optical Solutions, Siemens, Tellabs, and many others.