Infonetics: Disappointing Quarter for Optical Network Equipment Sales

Overview

Market research firm Infonetics Research today reported in its Optical Network Hardware vendor market share report that spending on optical gear dropped 23% globally in the first quarter of 2012 (1Q12) from the previous quarter.  This seems to contradict the recent WSJ article indicating there’s a new fiber optic buildout boom underway in the U.S.

http://techblog.comsoc.org/2012/04/03/telecom-industry-fiber-optic-building-spree-will-it-lead-to-another-fiber-glut

Andrew Schmitt, principal analyst for optical at Infonetics stated,”While optical hardware revenue trends in all world regions were not positive in the first quarter of 2012, the most alarming development is that year-over-year in EMEA – particularly Europe – spending on WDM optical equipment decreased faster than spending on legacy SDH equipment.  This is not the behavior of a region experiencing only a minor quarterly pullback. By contrast, the trend in North America was the opposite, with carriers cutting spending year-over-year but allocating towards forward-looking technology investments like WDM equipment and ROADMs.”

Mr. Schmitt adds: “EMEA and North America are both now trending downward on a rolling fourth-quarter basis, and Asia Pacific is flat. Still, conversations with vendors and carriers lead us to believe that spending in North America will resume moderate growth and we are forecasting solid gains in optical spending in China this year in large part due to our recent visits with Chinese carriers. But Europe is a tough call, with macroeconomic trends there not providing much hope and evidence that some service providers there are battening down the hatches.”

MORE OPTICAL HARDWARE MARKET HIGHLIGHTS 

  • While the global WDM and SONET/SDH optical network equipment market declined 23% in 1Q12 to $2.8 billion (the largest quarterly drop in years), the impact was sharpened by a strong previous quarter, when the market grew 9%
  • Revenue for all optical vendors declined in EMEA, with the exception of Infinera
  • Though EMEA typically has a seasonal sequential decline in the first quarter, 1Q12 was the worst quarter for optical capex in over 5 years
  • Fujitsu and Ciena outperformed competitors in North America
  • Asia Pacific was buoyed by strong spending in Japan, with NEC and Fujitsu posting eye-popping 28% gains in 1Q12 from the year-ago first quarter 2011.
  • Aside from the standout performances by NEC and Fujitsu, while many of the big vendors enjoyed gains the previous quarter, 1Q12 was characterized by smaller companies such as Infinera, ADVA, and Transmode outperforming the market
  • ROADM (reconfigurable optical add drop multiplexor) equipment spending was flat in 1Q12, an achievement considering this category posted a record quarter in 4Q11

REPORT SYNOPSIS
Infonetics’ quarterly Optical Network Hardware report tracks Adtran, ADVA, Alcatel-Lucent, BTI, Ciena, Cisco, ECI, Ericsson, Fujitsu, Huawei, Infinera, NEC, Nokia Siemens Networks, Nortel, Sycamore, Tellabs, Transmode, Tyco, ZTE, and others. The report provides worldwide and regional vendor market share, market size, and analysis (forecasts are published May 25). Equipment tracked: metro and long haul SONET/SDH and WDM optical network equipment (transport, ROADM, submarine line terminating equipment), and ports (Ethernet, SONET/SDH/POS, and WDM).

What’s Tracked in the report:  EquipmentWDMMetroTransport, ROADMLong HaulTransport, ROADM, SLTESONET/SDH Optical Network Hardware: RevenueMetro, Long HaulP-OTS: Revenue1st Gen, 2nd Gen, etc.

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