21 January 2004 San Jose, CA Lightwave -- Worldwide metro Ethernet equipment revenue hit $2.9 billion in 2003 and is projected to grow over 150% to $7.5 billion by 2007--a compound annual growth rate (CAGR) of 27%, contends a new report from Infonetics Research. Worldwide metro Ethernet equipment ports reached 1.1 million in 2003--up from 906,000 in 2002--and will grow over 400% to 5.8 million by 2007, a CAGR of 52%.
"One of the most interesting trends in this market is what's happening with RPR, which is growing at a phenomenal rate," reports Michael Howard, principal analyst of Infonetics Research and lead analyst of the report. "Worldwide RPR revenue hit $323 million in 2003, and we project it to grow 200% to $967 million by 2007, a CAGR of 32%. We discovered in our "Service Provider Plans for Metro Optical and Ethernet, North America and Europe 2004" study, also released this week, that service providers are figuring in RPR over SONET/SDH plans much more now than they were even six months ago. In fact," he adds, "63% now say they plan to offer Ethernet services over RPR in the next few years."
More than $24 billion will be spent worldwide on Ethernet in metro networks between 2003 and 2007. Every year over the next 10 years, Ethernet will account for a larger portion of metro capital expenditures, driving double-digit growth through 2007. Ethernet will inexorably take over the metro, claims the report, but the strong installed base of SONET/SDH will make the transition a slow one.
New technologies that enable service providers to add Ethernet to their existing networks, such as VCAT/GFP over SONET/SDH, RPR, MPLS, and VDSL, are easing the transition and paving the way for Ethernet to become a respected telecommunications-grade option for metro networks.
The report also finds that:
• Customer located equipment (CLE) revenue accounted for 42% and provider equipment (PE) revenue 58% of total revenue in 2003.
• CLE ports made up 49% and metro Ethernet PE ports 51% of total ports in 2003; by 2007, CLE ports will be 69% and PE 31%.
• Ethernet switches and routers accounted for 67% of total revenue in 2003, while
Ethernet over SONET/SDH (standard and RPR) made up 21%.
• Asia Pacific led the market with 41% of metro Ethernet equipment revenue in 2003, followed by North America at 35%, and Europe/Middle East/Asia (EMEA) at 19%.
• Asia Pacific service providers embrace Ethernet as a simpler, less expensive technology, driving the strong forecast for this region.
• Service providers in Korea, Japan, and China connected MTU/MDUs at a fast clip in 2003, led by government sponsorship or policy for fast access for the masses. Japan set a goal of connecting 30 million consumers and small offices/home offices (SOHOs) at 10 Mbits/sec and 10 million at 100 Mbits/sec by 2006.
• India just began its adoption of networking and Ethernet in 2003 and will contribute to strong growth in 2004-2007.
Infonetics Research's "Metro Ethernet Equipment" report includes market size, five-year revenue forecasts, technology share, and analysis covering all regions (worldwide, North America, EMEA, Asia/Pacific, and CALA), as well as detailed port analysis with five-year shipment forecasts. The report also separately tracks revenue from customer located equipment and provider equipment. Both areas are further refined into six categories: Ethernet switches and routers, Ethernet over SONET/SDH, RPR over Ethernet, Ethernet over WDM, Ethernet over copper and cable, and ePON. For more information, visit www.infonetics.com.