Packet Optical Transport Systems Up 4% in 3Q08; WDM, SONET/SDH Down

(Business News & Technology News, 4 Dec 2008)

Worldwide sales of metro and long haul WDM and SONET/SDH optical network hardware decreased 8 percent to $3.8 billion between the second and third quarter of 2008, according to a new study by market research firm Infonetics Research.

In the report "Optical Network Hardware", Infonetics forecasts a 23 percent increase in worldwide WDM optical equipment sales for the year, CY07 to CY08, and a continued gradual decrease in SONET/SDH equipment sales as service providers seek to multiply their bandwidth capacity and increase bit rates using WDM technology.

The report shows that the packet optical transport system (POTS) equipment segment increased 4 percent in 3Q08, and now represents 12 percent of the overall optical network hardware market. Infonetics expects worldwide POTS equipment manufacturer revenue to grow in the strong double-digits annually through at least 2011.

"As it looks today, the effect of the general economic downturn likely will be minimal on the optical network hardware market, because consumers and businesses continue to demand more bandwidth—even if at a somewhat slower pace—for video applications, mobile traffic, gaming, and other bandwidth-intense applications. As traffic pressures continue to mount, service providers continue to undertake IP transformation projects and invest in optical equipment, and increasingly so in WDM versus SONET/SDH, with the end result of a very slowly increasing optical network hardware market," says Michael Howard, principal analyst at Infonetics Research.

Other highlights from the report:
- The overall optical network hardware market is forecast to grow to $16.4 billion in 2011
- Year-over-year, from 3Q07 to 3Q08, WDM spending is up 20 percent
- The WDM portion of optical network hardware spending is now 49 percent
- Long-time market leader Alcatel-Lucent increased its overall optical network hardware revenue by 1 percent in 3Q08, a job well done considering 8 out of the next 9 manufacturers were down
- The lone exception is NEC, which increased its optical revenue a remarkable 26 percent in 3Q08 as it continues fulfilling a buildout in Japan
- The race for metro WDM ROADM revenue gets more competitive each quarter as more manufacturers enter the market and more service providers deploy metro ROADM gear
> Cisco maintains its metro WDM ROADM revenue lead, but barely, and there is now a one-point consecutive difference between the next four leaders (Fujitsu, Huawei, Tellabs, and NEC)

Click here for more information on Infonetics Research