Infonetics: Positive Q4 can’t rescue 2009 optical equipment market

Feb. 15, 2010
FEBRUARY 15, 2010 By Stephen Hardy -- Gains in optical equipment sales in North America and EMEA offset a declining Asia-Pacific market in the fourth quarter of 2009 to give the optical communications niche an overall sequential growth rate of 5%, says the latest edition of the Optical Network Hardware forecast report from Infonetics Research.

FEBRUARY 15, 2010 By Stephen Hardy -- Gains in optical equipment sales in North America and EMEA offset a declining Asia-Pacific market in the fourth quarter of 2009 to give the optical communications niche an overall sequential growth rate of 5%, says the latest edition of the Optical Network Hardware forecast report from Infonetics Research. However, the happy ending wasn’t enough to overcome three quarters of decline, leading to an overall drop of 14% for the year, according to the market research firm.

The North American market grew 7.6% and the EMEA space 23.9%, said Andrew Schmitt, directing analyst for optical at Infonetics, in an interview this morning with Lightwave. The Asia-Pacific market declined more than 15% in the quarter (see figure), but was the only niche to post a positive number for the year, according to the report.

This was the second consecutive quarter of growth in the North American market, according to Infonetics (see "Infonetics: North American optical network market on the rebound").

Alcatel-Lucent finished strongly in 2009, surpassing Huawei for the quarter. However, like the market overall, that performance wasn’t enough to unseat the Chinese equipment supplier from the top spot for the year. Schmitt listed the top five vendors for 2009 as Huawei, Alcatel-Lucent, Fujitsu, Nortel, and Nokia Siemens Networks. A Nortel/Ciena combination would have finished third for the year by a comfortable margin, he noted.

In addition to Huawei, Fujitsu, ADTRAN, and ADVA Optical Networking all posted market share gains for the year. This was due in large part to their success in what Schmitt called “the optical edge,” which includes such networking applications as wireless backhaul and links to enterprises.

“That part of the market is really starting to kick in and grow what used to be more of a niche business into more of a full-fledged product category,” said Schmitt. Many of the platforms in this space are what Schmitt called “SONET ADM pizza boxes” with an emphasis on Ethernet connectivity rather than T1s.

“They’re data-enabled customer demarc boxes and they sit right at the provider edge,” Schmitt said, adding that while they aren’t complex, the fact that they contain the software necessary to enable carriers to manage the hand off services to customers and ensure reliability. Some also provide Ethernet circuit emulation services.

The report notes that sales of 40-Gbps technology continued the slowdown first seen in 3Q09. However, Schmitt predicted that this niche will rebound by the second half of 2010. However, he also forecasted that DQPSK technology will begin to overtake DPSK at that time.

Infonetics’ quarterly Optical Network Hardware report tracks a wide number of companies. It provides worldwide and regional market share, market size, forecasts through 2014, and analysis for metro and long-haul optical network equipment, including SONET/SDH (ADMs and terminals, metro MSPPs and crossconnects), WDM (transport, ROADM, and long-haul submarine line terminating equipment), and packet-optical transport systems (P-OTS).

The report also tracks the number of ports and revenue per port for WDM and SONET/SDH products by speed (Ethernet, SONET/SDH/PoS, WDM), from below OC-48/STM-1 to 100 Gbps.

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