Optical networking to register slight uptick next year

Oct. 1, 2003

The optical-networking equipment market, which declined 53% last year and will drop 6% more this year, will rebound slightly next year, details a new report from KMI Research (Providence). Alcatel was the biggest player last year with a 14% market share. Lucent Technologies edged out Nortel Networks for the second largest market share, while Fujitsu and Siemens finished the year fourth and fifth, respectively, thanks to their embedded strength in the SONET and SDH markets.

Source: KMI Reasearch

Within the various equipment categories, next-generation SONET/SDH will have the strongest compound annual growth rate (CAGR), averaging 17% from 2002 to '07. DWDM will enjoy an 11% CAGR over that period, and optical crossconnects will grow at a 9% rate. Traditional SONET/SDH equipment (–38% CAGR) and digital crossconnects (–5% CAGR) will lose market value during 2002–07, contends the report. The pickup in next-generation SONET/SDH will be a major factor in this decline.

While the market is expected to grow from its $10.1-billion mark last year to nearly $12 billion by '07, that growth rate is well below those experienced in the years leading up to 2000. More cautious spending by carriers, slower bandwidth demand growth, strategies to maximize existing networks, mergers and acquisitions of carriers, price erosion, and the availability of inexpensive divested assets will temper the market rebound.

For more information about the report, "Optical Networking: Worldwide Equipment Markets Update," visit www.kmiresearch.com.