Growth set to resume in 2005

Recent market forecasts predict a delayed recovery in the optical communications industry, but with brighter prospects in some sectors.

Dell'Oro's Optical Transport 5-Year Forecast Report predicts continued decline from a USD23bn peak in 2000 to USD8.1bn in 2004 (down 65%) before modest growth in 2005 (www.delloro.com).

"We see the DWDM metro, SONET/SDH multi-service, and optical switch market segments resuming growth in 2003 and 2004 to meet either new service requirements or as technology replacements," says analyst Jimmy Yu.

Dell'Oro also says that the router market will grow from USD6.8bn in 2002 to USD6.9bn in 2003 then USD8.2bn in 2006. The largest trend is the replacement over the next seven years of the installed base of 1-10Gbit/s routers, representing USD4-5bn. In the >10Gbit/s router segment "strong growth" will resume from 2004.

Infonetics Research says that 1G and 2G FibreChannel SAN product sales grew 36% from first-half to second-half 2001, and 15% from USD822m in 2001 to USD946m in 2002 (www.infonetics.com).

End-users in North America are increasing their use of storage interconnection products (68% of large organisations will use them by 2004) and hosting service providers are increasing their data centre storage capacity by an average of 18% by next year.

Disaster recovery and business continuity plans will continue to drive demand for outsourcing storage to hosting service providers. Growth will be driven by 2G shipping in volume and pricing closing on 1G by late 2002. For 2001 product shipments, North America leads EMEA and Asia Pacific. This should continue through 2002.

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