Optical long haul recovers in 2005 with 32% gain

Market Wire, February, 2006

Worldwide optical revenue increased 19% between 2004 and 2005, to $10.7 billion, driven by strong growth in the metro equipment segment (up 15%) and the long haul segment (up 32%), according to Infonetics Research's quarterly Optical Network Hardware report.

"2005 was the first time we've seen a gain in the optical long haul segment since 2001, a good sign that carriers realize that investing in today's long haul equipment will save them money in the long run through operational returns," said Michael Howard, principal analyst at Infonetics Research. "The new long haul WDM equipment provides greater efficiencies through ROADMs and other advanced features, enabling carriers to address competitive pressures, rising broadband traffic, and IPTV opportunities. As more carriers upgrade their networks, we'll see steady growth in the optical market at least through 2009."

Although the long haul segment is improving, the bulk of spending continues to be in metro optical equipment, which made up 71% of all optical network hardware revenue in 2005, compared to long haul's 29%. This 70:30 ratio will remain about the same through 2009, as increased corporate network traffic, storage networking, consumer broadband demands for services such as IPTV, and service provider wireless network backhaul investments continue driving metro spending.

More Highlights

-- Optical network hardware revenue was up 10% to $3.0 billion between
   3Q05 and 4Q05, fueled by gains by Adva, Alcatel, Ciena, Corrigent,
   ECI, Huawei, Siemens, Tellabs, and others; Cisco, Fujitsu, and NEC
   were down for the quarter

-- Alcatel continues in first position for worldwide optical network
   hardware revenue share in 2005, followed by Nortel, Huawei,
   Fujitsu, and Lucent

-- In 2005, WDM hardware made up 32% of total optical revenue and will
   increase to 40% in 2009; WDM ROADM switch hardware made up 19% of WDM
   revenue and will increase to 37% in 2009

-- North America accounted for 32% of total optical network hardware
   revenue, EMEA for 33%, Asia Pacific 29%, and CALA 6% in 2005

Infonetics' report tracks metro and long haul SONET/SDH, WDM transport, and WDM switch (broken out by ROADM and non-ROADM) hardware. Forecasts and regional market share are updated quarterly and cover all regions.

ADTRAN, ADVA, Alcatel, Ciena, Cisco, Corrigent, ECI Telecom, Fujitsu, Huawei, Infinera, Lucent, Marconi, Meriton, Movaz, NEC, Nortel, Siemens, Tellabs, Transmode, Tropic, Turin, Zhone, ZTE, and others are tracked in the report.

Download sample data at www.info.infonetics.com . For sales, contact Larry Howard, vice president, at larry@infonetics.com or 1 (408) 583-3335.

Infonetics Research ( www.infonetics.com ) is the premier international market research and consulting firm specializing in data networking and telecom, providing a complete view of the market through constant interaction with equipment manufacturers, service providers, end-users, chip and component manufacturers, sales channels, and the financial community. Services include quarterly market share and forecasting, end-user survey research, service provider survey research, and service provider capex analysis.

Press Contact: Michael Howard Principal Analyst, Co-Founder Infonetics Research 1 (408) 583-3351 Email Contact