Infonetics expects downturn in optical network hardware spending

If you’re anticipating an optical network hardware spending bump from carriers in the second half of 2013, Infonetics says you’ll be disappointed. Figures for the third quarter of 2013 show both a sequential and year-on-year decline for fiber-optic network equipment, according to the market research firm’s third-quarter 2013 (3Q13) "Optical Network Hardware" report. And the situation won’t improve in the fourth quarter, say Infonetics analysts.

Despite a good quarter for WDM sales, which rose 4% on an annual basis, overall optical network hardware spending decreased 7% sequentially and 1% versus 3Q12, according to the report. Strong sales in North America (up 13.4% versus 3Q12 after an 11.1% year-on-year increase in the previous quarter) were offset by weakness in Europe, the Middle East, and Africa (EMEA) as well as Asia-Pacific.

EMEA declined both sequentially and year-on-year, coming close to the record lows set in the first quarter of this year (see “Optical network hardware market 'looking good' in 2013 says Infonetics Research”). Meanwhile, weakness in Japan dragged down the overall Asia-Pacific market.

The weak third-quarter performance left total optical spending flat on a rolling four-quarter basis. WDM spending bucked the overall trend to achieve its fifth consecutive quarter of growth in 3Q13. Huawei, Ciena, and Alcatel-Lucent were the primary beneficiaries of the boost in WDM sales as the quarter’s market share leaders.

But the strength of WDM isn’t expected to help the market during the current quarter. "Looking ahead, we expect Tier 1 carriers to dial back spending,” says Andrew Schmitt, principal analyst for optical at Infonetics Research. “Capex was so strong in the first and second quarters of 2013, it's unreasonable to anticipate a big flush in the fourth quarter, especially in North America. There's a general weakness in the market, even from carriers that didn't aggressively ramp spending earlier this year."

Infonetics' quarterly optical hardware report provides worldwide and regional market size, market share, forecasts through 2017, analysis, and trends for metro and long-haul SONET/SDH and WDM equipment, Ethernet optical ports, SONET/SDH/PoS ports, and WDM ports.

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