Ovum says better times ahead for optical network equipment sales

Echoing the sentiments expressed by other market research analysts (see “Infonetics sees 2013 growth in optical hardware sales”), Ovum predicts that sales of optical transport equipment will bounce back modestly in 2013 after a tough 2012.

Last year closed with a whimper, according to Ovum’s recently released “Market Share Alert: 4Q12 and 2012 Global ON” (where “ON” stands for “optical network). The fourth quarter marked the third consecutive quarter that fell short of its year-ago equivalent, Ovum reports. Last year’s final quarter was down 6% versus the same quarter in 2011, according to Ovum.

For the year, optical communications equipment sales finished at nearly $14.6 billion, more than $1 billion below 2011 levels. Spending in Asia-Pacific was up 3% for year, but couldn’t prop up the market in the face of declines of 13% in North America, 12% in EMEA, and 3% in South & Central America (SCA).

“The current downturn is being driven by several factors including faltering economic growth in Europe and the U.S., lower pricing due to intense vendor competition, and a quickening in the shift in spending away from TDM aggregation equipment,” says Ovum analyst Ron Kline.

This “recession,” as Ovum described it in a press release, will continue into this year. However, vendors shouldn’t be heading for the exits just yet. “All is not lost, even with four uninspiring quarters of 2012 behind us; Ovum’s forecast predicts 2% growth globally for 2013 with the ON market surpassing $17.1 billion in 2018,” according to Kline. “Overall we foresee strong growth in SCA, modest growth in Asia-Pacific, and low growth in EMEA, North America, and submarine line terminal equipment sales.”

Kline notes that vendors appear to have picked up the same positive sentiments, if perhaps only for the near term. “Guidance from vendors is cautiously optimistic, with good short-term visibility into order growth, while long-term vision on customer spending patterns remains cloudy,” he reports.

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