Report: Optical network hardware up 11% in 2006; SONET/SDH on the decline

MARCH 6, 2007 -- SONET/SDH equipment has long been at the top of the heap in the optical network hardware market. But with more and more service providers pushing WDM and Ethernet instead of SONET/SDH in their access networks, the technology's days are numbered, Infonetics counters in its latest Optical Network Hardware report.

MARCH 6, 2007 -- Worldwide optical network hardware revenue grew 7% to $3.3 billion in 4Q06 from 3Q06, and grew 11% between 2005 and 2006, reaching $11.9 billion, according to Infonetics Research (search for Infonetics).

According to the market research firm, SONET/SDH equipment has long been at the top of the heap in the optical network hardware market, representing 64% of the overall market in 2006. But with more and more service providers around the world pushing WDM and Ethernet instead of SONET/SDH in their access networks, the technology's days are numbered, Infonetics counters in its latest Optical Network Hardware report.

Starting in 2007, spending on SONET/SDH equipment will slowly begin to decrease every year, while WDM spending increases every year, at least through 2010, the report forecasts.

"Spending on SONET/SDH equipment has long dominated in the optical network hardware market, but WDM sales have steadily grown every year since 2002. In fact, in the fourth quarter of 2006, WDM sales shot up 18% while SONET dropped 18%. In 2002, WDM represented about 30% of total optical network hardware spending, SONET/SDH about 70%. Eight years later, in 2010, we expect WDM spending to surpass SONET/SDH," explains Michael Howard, principal analyst.

Competitive pressures, rising broadband and mobile traffic, and video and IPTV opportunities will continue to drive carriers to upgrade their networks, which will keep the optical market healthy for the next 5 years, but the shift from SONET/SDH to WDM will keep overall optical network hardware revenue flat for the next several years.

The report's highlights include the following:

  • Worldwide optical revenue is forecast to reach $12.2 billion in 2010.
  • Alcatel-Lucent held first place in 2006 worldwide optical network hardware revenue market share, followed by Huawei, then Nortel.
  • Siemens leads the worldwide long-haul WDM ROADM switch revenue market share. Cisco leads in metro ROADM.
  • North America makes up 35% of the worldwide optical network hardware market, EMEA 33%, Asia Pacific 27%, and CALA 6%.

Infonetics' report provides market share, market size, and forecasts for metro and long-haul optical equipment, broken out by SONET/SDH versus WDM, with transport and switch splits, DWDM and CWDM splits, and ROADM/non-ROADM splits. Forecasts and regional market share are updated quarterly and cover all regions.

The report tracks ADTRAN, ADVA Optical, Alcatel-Lucent, Ciena, Cisco, Corrigent, ECI Telecom, Ericsson, Fujitsu, Huawei, Infinera, Meriton, NEC, Nortel, Siemens, Tellabs, Transmode, Tropic, Turin, Zhone, ZTE, and others.

For more information on the report, visit Infonetics Research.

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