North American long-haul optical transport spending turns around in 4Q18: Cignal AI

After more than two years of weakness, spending by North American network operators on long-haul WDM gear turned positive in the fourth quarter of last year, according to Cignal AI’s “Optical Hardware Report” for the quarter. The reversal helped overall optical network hardware sales for such systems grow by nearly 20% during the quarter, says the market research firm. Overall, spending on long-haul WDM systems grew nearly 8% during 2018.

After more than two years of weakness, spending by North American network operators on long-haul WDM gear turned positive in the fourth quarter of last year, according to Cignal AI’s “Optical Hardware Report” for the quarter. The reversal helped overall optical network hardware sales for such systems grow by nearly 20% during the quarter, says the market research firm. Overall, spending on long-haul WDM systems grew nearly 8% during 2018.

New generations of coherent transmission systems will spark continued growth in long-haul and submarine line terminal equipment (SLTE) into this year, predicts Scott Wilkinson, optical hardware lead analyst at Cignal AI. For example, the 600-Gbps systems announced at OFC 2018 should begin to reach the field soon (see, for example, “M-net trials 500-Gbps via Nokia super coherent Photonic Service Engine 3 with probabilistic constellation shaping” and “Coriant adds 600G transmission to Groove via CloudWave T”).

The uptick in North American spending included more than long-haul hardware, with outlays for cloud and colocation applications increasing as well. While the turnaround in 4Q18 wasn’t enough to prevent an overall year-on-year decline in North American systems sales, Cignal AI predicts that 2019 will see modest growth in the region’s spending. Ciena and ADVA benefited the most from the more active quarter, which both companies seeing sales increase by double-digits.

The Europe/Middle East/Africa (EMEA) region also saw growth in 4Q18, although not as much as the previous year. Still, sales there for the year were up slightly from 2017 and should continue to show momentum into this year, say Cignal AI analysts.

In Asia, Japan saw a significant spike in optical systems sales in both the third and fourth quarters of 2018. The activity in the final six months of the year led to year-on-year double-digit growth. However, Cignal AI does not see this rate as sustainable and predicts single-digit growth for 2019.

In China, sales climbed year-over-year, but not at previous rates. ZTE’s troubles early in 2018 led to flat year-over-year sales in China during the year. Cignal AI predicts the Chinese optical network hardware market will grow at a single-digit rate in 2019.

Subscribers to Cignal AI’s “Optical Hardware Report” also gain access to the market research firm’s Optical Hardware Market Share Tracker, which offers the quarter’s up-to-date market data and provides real-time visibility on individual vendors’ results as soon as they are reported. A new interactive format enables users to manipulate data online and see information in a variety of ways, says the company.

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