AUGUST 12, 2008 â�� According Ovum's (search for Ovum) preliminary quarterly results estimation for global optical equipment networking vendors, the global optical networking (ON) market topped $4 billion for the second time in three quarters, growing 8% sequentially and 16% year-over-year. However, weakness in North America troubles Ovum analysts.
"The sequential and year-over-year global market gains were respectable, but we are somewhat concerned about the unexpected drop in North American spending. No vendors pointed directly to US economic problems causing declines in ON spending and one shaky quarter does not indicate a market tumble, but spending in North America was down sequentially in single digits versus our expectation of a 10% increase," remarks Ovum's vice president, ON, Dana Cooperson. "Spending in EMEA appears to be just off our most likely expectations, while spending in CALA met expectations and Asia-Pacific spending outperformed our projections. Year over year, all the regions were up significantly except North America, which appears flat. Our analysis of the reasons behind the disappointing 2Q08 North American performance is incomplete, but at least AT&T and Sprint seem to have contributed to the lackluster spending, with DCS and OED hit, particularly DCS. Tellabs and Cisco bore the brunt of reduced North American spending."
Spending in EMEA topped all other regions, with over $1.4 billion for the quarter, according to Ovum. Sequential and year-over-year growth was strong in all regions other than North America. "At the product level, WDM and next-gen bandwidth management revenue growth continues to be strong in all regions, with good to great sequential and year-over-year results regionally. In addition, growth on next-gen SONET/SDH spending was very good everywhere but North America, where spending declined both sequentially and year over year," noted Cooperson.
Of the top ten vendors, Cisco, Fujitsu, and Tellabs all posted sequential declines of over 20% (of these three, only Fujitsu was up over 2Q07). The biggest gainers over 1Q08 were Alcatel-Lucent, Huawei, and Nortel, which were all up more than 20% sequentially and all gained over 2Q07. Huawei posted the largest gain, Tellabs the largest decline in 4Q rolling share.
"Alcatel-Lucent narrowly missed hitting the $1 billion mark, with good growth both sequentially and relative to 2Q07 to comfortably hold its market-leading position. The company pointed to a wide number of positive growth areas, including fixed-mobile convergence/mobile backhaul, network transformation, vertical markets, emerging markets, and submarine links/landing stations," said Cooperson.