High growth for U.S. dwdm market

High growth for U.S. dwdm market

By GRACE F. MURPHY

Between 1996 and 2003, the U.S. dense wavelength-division multiplexing (dwdm) market is projected to increase 39.4%, according to U.S. Dense Wavelength Division Multiplexing (dwdm) System Markets, a market engineering consulting report from Frost & Sullivan, of Mountain View, CA.

The report bases its prediction on the growth of the Internet and voice, video, data, and multimedia applications; increasing competition as a result of telecommunications deregulation; insufficient fiber supply; and demand for systems that are easy to upgrade.

Market restraints identified in the report include the high-cost of dwdm technology in short-haul applications, a lack of standards, and the newness of the technology. For example, cost is keeping many small carriers--especially local exchange carriers who may have to find more-economical options to increase bandwidth--from implementing dwdm, the report reveals.

The lack of standards for dwdm systems is another hurdle the market needs to overcome to achieve sustained high growth. However, the report notes that the International Telecommunication Union is working on standards that will encourage interoperability.

The third market restraint--a lack of testing in network environments--prevents some telecommunications companies from investing in an unproven technology.

Other trends affecting the market and listed in the report include the following:

local exchange carriers entering the

dwdm market,

introduction of 32-channel-or-higher

dwdm sy stems in the next two years,

realization of all-optical networking with

dwdm as the "first step,"

migration from dwdm component level

to photonic subsystems,

development of optical crossconnects

enhancing dwdm functions.

The report predicts that although dwdm systems with 8-channel capabilities made up a large part of the total dwdm system market in 1996, the percentage will become minimal in 2003 as newer systems enter the market. dwdm systems with 16-channel capabilities will experience a popularity peak in 1998 before gradually declining as systems with higher capacity are introduced.

dwdm systems with 32 or more channels are scheduled for marketing in 1998 and 1999, and the report predicts they will make up the majority of the dwdm system market in 2003.

The dwdm market consists of systems integrators and component manufacturers, and the thrust of the report is on systems integrators--the companies that offer complete end-to-end dwdm solutions.

The report forecasts challenges facing market competitors, including the effects of high research and development costs on small companies; emerging niche markets creating opportunities for strategically targeted companies; and customer preference for turnkey solutions.

For more information, contact Frost & Sullivan at tel: (650) 237-4383, fax: (650) 903-0915, or e-mail: [email protected]