by Stephen Hardy
Part of my job is to entice people like you to read the content I provide. For example, I’m supposed to come up with catchy subject lines for our newsletters. (Don’t subscribe? You can fix that.) A few weeks ago, I touted a story about Ovum’s reckoning of the first quarter of 2012 for the optical-network hardware space with the teaser “Yup, 1Q12 was pretty bad.” I received a tweet 30 minutes later from a reader who replied, “Q2 seems to get even worse so far. L”
Like the moon that revolves around our fair planet, it appears the optical communications market regularly waxes and wanes. Seems like just yesterday we were preparing for a period of extended darkness – but it was actually a full year ago, if you were a company like Finisar or Oclaro facing inventory correction, or as far back as 2009, if we’re talking true macroeconomic twilight. Time flies when you’re not having any fun at all.
Certainly the overall economic environment looks troubled. Yet into this gloom recently have come certain elements of the market research community to spread a bit of cheer. For example, Infonetics Research recently issued a report stating, all current evidence to the contrary, that service-provider capital expenditures actually should spike this year. “We’re expecting a telecom capex hike in 2012 as operators around the world ramp their spending like crazy to launch LTE networks, modernize their mobile networks, and carry out national wireline broadband initiatives,” Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics, was quoted as saying in the press release that announced the report.
Meanwhile, on the day I’m writing this, LightCounting has issued advice for optical technology suppliers seeking a way through this period of economic uncertainty. It bears the subtitle, “Do not give up on the optical networking industry.” One reason the firm gives for this admonishment is that, despite the economic headwinds, it believes that sales of optical components and modules will grow close to 10% this year. Global FTTx initiatives, demand for 100-Gbps transmission technology, and data-center upgrades should spur this increase, LightCounting believes.
Of course, LightCounting states, what the space really needs is global economic recovery. Recent history provides several examples of dramatic growth in optical technology spending when global and national economies shrug off periods of malaise. The firm even paints a picture of what such a boomlet might look like.
LightCounting posits this blossoming as a 2014 scenario. So what are you supposed to do until then? Probably something similar to what you did last time…and the time before that. Because once again the problems the niche faces are not of its own creation. In fact, the fundamentals of increasing bandwidth demand continue seemingly unabated by economic friction. Investments in optical infrastructure will continue to be necessary. As the space has experienced before, it’s just a matter of time.