Optical networking market hits $3B in 4Q05, $11B for year, says Ovum-RHK

Feb. 16, 2006

February 16, 2006 London, UK -- Ovum-RHK has announced its preliminary analysis of fourth quarter and full-year 2005 results for optical networking equipment vendors. The firm says that 4Q05 revenues for the market reached $3 billion, up 7% versus 4Q04, and that 2005 total revenues reached $11 billion, up 17% when compared to full-year 2004.

February 16, 2006 London, UK -- Ovum-RHK has announced its preliminary analysis of fourth quarter and full-year 2005 results for optical networking equipment vendors. According to the firm, in the fourth quarter, revenues for the segment grew 7% versus last year, and 8% sequentially. The firm says that 4Q05 revenues for the market reached $3 billion, up 7% versus 4Q04, and that 2005 total revenues reached $11 billion, up 17% when compared to full-year 2004.

The firm says that Alcatel and Huawei each grew revenues over 30% in the quarter and were the only vendors to post over $1 billion in optical networking revenue for the year, with Alcatel topping $1.7 billion. According to the firm's analysis: Alcatel revenues increased 34% sequentially, 3% vs. 4Q04; Huawei revenues increased 44% sequentially, 6% vs. 4Q04; Alcatel and Huawei each gained over 3 points of market share; and Lucent and Fujitsu each lost over two points of market share

According to the firm, the EMEA (Europe, Middle East, Africa) and Asia-Pacific regions each grew over the market average sequentially for the quarter, while the North American market was slightly down, as Verizon "put on the spending brakes." The firm says that growth in CALA (Caribbean and Latin America - the smallest regional optical networking equipment market) just missed the global pace.

The firm says that all regions grew over 10% in 2005 relative to 2004, marking continued strong growth in North America and EMEA and a return to growth in both Asia-Pacific and CALA. According to the firm, growth in 2005 was robust in all next-generation ON product segments, with the multiservice SONET/SDH ADM (aka "MSPP") market, the ON largest equipment segment, approaching $5 billion and the "healthy" metro WDM segment topping $1.4 billion for the year.

"The strength of the 2005 market derives from the optical network's key role as the foundation of broadband multiservice networks," contends Dana Cooperson, vice president of Optical Networking at Ovum-RHK. "The capacity and agility of today's optical gear makes possible the economical transport and management of the flood of broadband video and data services that operators around the globe are launching to support residential and enterprise customers. The current generation of optical gear meets the new services' bandwidth, security, resiliency, and flexibility needs. The vendors who are thriving in this growth market are those that can meet customers' needs for cost-effective multiservice platforms backed by excellent service and support."

Details of the 4Q05 results and additional analysis have been published by the firm's Optical Networking advisory service. The firm says the service combines consistent quarterly analysis and annual forecasts with ongoing commentary and analysis of the global and regional aggregation, bandwidth management, WDM, and Ethernet transport equipment markets.