As service providers struggle with inventory issues and a challenging macroeconomic environment, they have postponed purchases of new optical equipment to later quarters. This shift has affected the optical transport market.
According to a new Dell’Oro Group report, the optical transport equipment market declined 13 percent year over year in the first quarter of 2024 and is predicted to decline further in 2024.
Due to customers working through inventory and exercising controlled capital spending in an uncertain economic environment, the optical transport market is forecast to decline by two percent in 2024.
Specifically, the DWDM market declined in most parts of the world, with the largest in North America and parts of Asia Pacific. The only two markets that grew year over year were China and the Middle East and Africa (MEA) region. China grew 8 percent, and MEA grew 16 percent.
Only three vendors—Cisco, Huawei, and ZTE—gained more than one percentage point of market share in the first quarter of 2024 compared to the year-ago period.
"Customer’s excess inventory of DWDM systems continued to be at the center stage of the Optical Transport market decline in the first quarter of 2024,” said Jimmy Yu, VP at Dell’Oro Group.
Yu added, "We think the steeper-than-expected drop in optical transport revenue in 1Q 2024 may have been driven by communication service providers becoming increasingly cautious about the macroeconomic conditions, causing them to delay projects into future quarters.”
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