Cignal AI analyst on 4Q20 North American optical transport market: ‘It's really, really, really ugly. Really.’

Thanks to the spending that took place during the first half of the year to address bandwidth demand related to COVID-19, North American network operators apparently had little interest in spending more in the final six months of the year, according to Cignal AI. After reporting a downturn in the third quarter (see “North American cloud and colo spending on optical hardware goes negative in 3Q20: Cignal AI”), the slippage continued in the fourth quarter, the market research firm reports in its most recent Transport Hardware Report. As Scott Wilkinson, transport hardware lead analyst at Cignal AI, put it in a Tweet after the 4Q21 results were first tabulated: “It's really, really, really ugly. Really.”

While the early year spending in North America raised hopes for a banner year in optical network hardware sales, Cignal AI reports that full-year sales ended slightly down versus 2019 levels. Ciena and Infinera reported flat year-on-year sales and Cisco, Nokia, and Fujitsu announced declines, Cignal AI noted. Sales of packet switching and routing gear in North America followed a similar trend downward, at -20% for the quarter. Similarly, European spending trends improved in the final quarter of 2020 but were down on an exchange rate adjusted basis. This led to full-year sales in EMEA that Cignal AI termed “steady.”

“Despite the massive disruptions during 2020, overall spending declined only slightly in 2020,” commented Wilkinson via a Cignal AI press release. “But this quarter, almost all vendors felt the impact of capex pulled forward in the year due to operators scrambling to secure safety stock.”

Separately, Wilkinson expressed optimism that the situation will improve this year.

Cignal AI’s Transport Hardware Dashboard is available to subscription clients of the Transport Hardware Report. The dashboard provides real-time market data with vendors’ results as they are released, says the market research firm. Users can manipulate variables online to view information in a variety of ways, as well as download Excel files with current snapshots of market reporting.

For related articles, visit the Business Topic Center.

For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer’s Guide.

To stay abreast of fiber network deployments, subscribe to Lightwave’s Service Providers and Datacom/Data Center newsletters.