Infonetics: Optical network hardware and carrier router and switch sales up in 3Q06

NOVEMBER 29, 2006 -- Worldwide optical network hardware revenue increased 4% between the second and third quarter of 2006, reaching $3.1 billion in 3Q06, according to Infonetics Research's (search for Infonetics Research) latest "Optical Network Hardware" report.

The market is forecast to grow 9% between 2005 and 2006, and will reach $11.8 billion in 2009.

"The optical hardware market has stabilized, with a likely pattern of slow growth in WDM and a slow decline in SONET/SDH after 2007," notes Michael Howard, co-founder of Infonetics Research. "The overall market will continue steady growth, driven by the ever-increasing bandwidth use by consumers and businesses for video applications, mobile traffic, broadband, and IPTV," he says.

According to the report:

• Alcatel had a blockbuster quarter, up 27% in 3Q06, maintaining its leadership in worldwide optical network hardware revenue. Nortel captured the second spot, followed by Huawei and Lucent.
• Tellabs holds the lead in 3Q06 worldwide SONET revenue market share, followed by Fujitsu, Lucent, and Nortel.
• WDM ROADM switch hardware sales comprise 31% of all WDM sales and are projected to increase to 38% of the total by 2009.
• Metro equipment comprises 65% of all optical network hardware revenue, while long haul comprises 35%.
• Thirty-five percent of worldwide optical network hardware sales come from North America, 33% from EMEA, 26% from Asia Pacific, and 6% from CALA.

Infonetics has released a related report, "Service Provider Routers and Switches," in which it claims that the worldwide service provider router and switch market--including carrier Ethernet switches, IP core and edge routers, enterprise-class Ethernet switches, and multiservice core and edge ATM switches--is up 2% to $2.4 billion in 3Q06.

Infonetics expects the overall market to reach $12.3 billion in 2009, a 71% increase from 2005.

"IP traffic continues to grow strongly, often anecdotally cited by carriers as increasing 50% to 100% each year, with broadband and IP VPN traffic underlying that growth," explains Howard. "Service providers are experiencing faster traffic growth as they deploy IP video (including IPTV) in their networks. IP and carrier Ethernet switch and router sales continue to climb, while multiservice ATM switch sales continue to decline (down 20% this quarter)," he says.

Among the highlights of the report:

• Cisco increased its lead in the overall service provider router and switch market, with 50% of worldwide revenue in 3Q06, followed by Juniper and Alcatel.
• Carrier Ethernet switch and router (CESR) sales are up 10% to $1.28 billion in 3Q06, with annual sales expected to increase 269% between 2005 and 2009.
• Worldwide IP core and edge router sales are up 4%.
• Sixty-six percent of worldwide service provider router and switch sales come from routers, 20% from carrier Ethernet switches, 13% from multiservice ATM switches, and 1% from enterprise-class Ethernet switches.
• Thirty-nine percent of all service provider router and switch revenue comes from North America, 31% from EMEA, 24% from Asia Pacific, and 5% from CALA.