Report: Optical hardware market down 10% in Q1 '05; metro WDM switches to jump 247% by '08

June 6, 2005 San Jose CA --Worldwide optical network hardware revenue decreased 10% to $2.3 billion between Q4 of 2004 and Q2 of 2005, a drop that was anticipated after the market surged 21% between Q3 and Q4 in 2004, according to a report by Infonetics Research.

The report says that many manufacturers were down in the first quarter of the year after showing big gains in the fourth quarter, especially market leader Alcatel, which according to the report posted huge gains in Q4 of 2004, but dropped 46% in Q1 of 2005, having the largest effect on the overall market. The report says that while many other manufacturers also had "down" quarters, those having "up" quarters included Adva, Cisco, Ciena, ECI Telecom, Fujitsu, NEC, and Siemens.

The report forecasts annual optical network hardware revenue to increase 4% in 2005, and 16% between 2005 and 2008, with the strongest growth coming from metro WDM optical equipment, which will increase 60% between 2005 and 2008, according to the report. The report sees the metro WDM switch segment as especially strong, jumping 247% by 2008.

"We expect worldwide optical revenue to hit the $10 billion range by 2008, a five-year compound annual growth rate in the mid single digits, as we see a steady healthy optical market driven by the undeniable onward push of bandwidth use by consumers and businesses," maintains Michael Howard, principal analyst at Infonetics Research, and the report's author.

Among the report's highlights:

* Alcatel continues its strong lead in worldwide total optical network hardware revenue market share, despite a heavily down first quarter.

* Nortel is second, followed very closely by third-place Fujitsu, which overtook fourth-place Huawei this quarter in large part due to Fujitsu's huge gains in the Asia Pacific market, where Fujitsu now leads.

* Metro makes up 74% of all optical network hardware revenue, while long haul continues to make up a smaller portion (26%).

* The EMEA region accounts for 35% of optical network hardware revenue, North America and Asia Pacific each for 30%, and CALA for 5%.

The report, "Optical Network Hardware," tracks SONET/SDH and CWDM/DWDM hardware. Forecasts and regional market share are updated quarterly and cover all global regions (worldwide, North America, EMEA, Asia Pacific, CALA). Companies tracked by the report include Adtran, Adva, Alcatel, Ciena, Cisco, Corrigent, Fujitsu, ECI Telecom, Huawei, Infinera, Lucent, Mahi, Marconi, Movaz, NEC, Nortel, Siemens, Tellabs, Transmode, Tropic, Turin, White Rock, Xtera, Zhone, ZTE, and others.