Optical networking a $US12 billion business: Ovum

Metropolitan broadband links fastest growing segment

Analyst firm Ovum has released its quarterly results for global optical equipment networking vendors with the preliminary indication that the global optical networking (ON) market topped $US3 billion for the seventh consecutive quarter.

The market was exceptionally strong in Q4 2007, which increased 23 percent year-over-year, with spending in North America more than all other regions.

Ovum's VP of optical networking, Dana Cooperson said the sequential decline, particularly after a super-hot Q4 2007 was expected, while the strong growth over Q1 2007 points to continued strength in spending for optical networking gear used for consolidating disparate services onto a single network and supporting growth in broadband consumer and enterprise services.

"The trends we've been following for at least the past year - the increasing fraction of spending dedicated to metro WDM, the shift in end-to-end solutions marketing (if not purchasing), growing investment in undersea capacity, the growing addressable market for ON gear as emerging markets and alternative network builders take out their wallets, and network evolution - remain powerful forces for market growth and spending shifts," Cooperson said.

Spending in North America topped all other regions, with just over $US1.3 billion for the quarter. While all regions posted growth over Q1 2007, only North America exceeded Q4 2007 spending.

"Both Fujitsu and NEC both got a positive boost from a strong Japanese market, the words 'strong' and 'Japanese market' not having been side by side in many a quarter," Said Cooperson.

Next-gen SDH/SONET maintained its position as the single largest segment, with $US1.5 billion in global spending, but metro WDM, with quarterly spending of nearly $US900 million, continues to grow at a faster pace and add to its heft as the second biggest segment.

According to Ovum's research, the top ten ON vendors as of Q1 2008 are Alcatel-Lucent with 20 percent market share, Ciena (4.8), Cisco (5.0), Ericsson (5.1), Fujitsu (8.1), Huawei (14.3), NEC (5.5), Nokia Siemens Networks (6.2), Nortel (6.3), Tellabs (6.3), and other vendors making up 18.4 percent.

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