Optical networking topped $3B in 1Q07

July 1, 2007

According to Ovum-RHK, which recently announced its preliminary analysis of first-quarter 2007 results for optical networking equipment vendors, global revenues were down 6% versus 4Q06 and up 22% versus the year-ago quarter.

Strong growth in the North American market countered declines in Asia Pacific, CALA, and EMEA to limit the seasonal quarterly decline to 6%, say Ovum-RHK analysts. Year over year, optical networking market growth topped 20% for $12.3 billion in annualized spending. Of the top vendors, Nokia Siemens Networks (NSN) and Tellabs each benefited from the strong North American market to post the largest sequential revenue gains, while Alcatel-Lucent, Huawei, NEC, and Nortel each posted revenue declines of more than 10%.

“As predicted, the pause in spending in North America in the second half of 2006 ended in 1Q07, with strong spending gains in all product segments except legacy long-haul DWDM,” notes Dana Cooperson, vice president and practice leader of network infrastructure at Ovum-RHK. “Spending in China, as expected, was seasonally down. The anemic Japanese market lagged historical expectations in that country’s last fiscal quarter as the NTT companies continued to hold back on optical network upgrades,” she says.

Ethernet and 10-Gbit/sec transmission continued to grow strongly, as did both metro WDM and next-generation multireach DWDM for network backbone applications. Meanwhile, despite an increase in the number of subsea projects announced and awarded over the past six months, spending on submarine line terminal equipment dipped in the quarter. Global spending continues to be driven by bandwidth growth across a wide spectrum of broadband wireline and mobile applications, including video content applications.

For additional information about Ovum-RHK’s Optical Networking Services, visit www.ovum.com.

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