Optical network hardware up 11% in 2006; WDM gaining, SONET/SDH declining

Market Wire, March, 2007

Worldwide optical network hardware revenue grew 7% to $3.3 billion in 4Q06 from 3Q06, and grew 11% between 2005 and 2006, reaching $11.9 billion.

SONET/SDH equipment has long been the king of the hill in the optical network hardware market, representing a whopping 64% of the overall market in 2006.

But with more and more service providers around the world pushing WDM and Ethernet instead of SONET/SDH in their access networks, the king's days are numbered, says Infonetics Research in its latest "Optical Network Hardware" report.

Starting in 2007, spending on SONET/SDH equipment will slowly begin to decrease every year, while WDM spending increases every year, at least through 2010.

"Spending on SONET/SDH equipment has long dominated in the optical network hardware market, but WDM sales have steadily grown every year since 2002. In fact, in the fourth quarter of 2006, WDM sales shot up 18% while SONET dropped 18%. In 2002, WDM represented about 30% of total optical network hardware spending, SONET/SDH about 70%. Eight years later, in 2010, we expect WDM spending to surpass SONET/SDH," said Michael Howard, principal analyst at Infonetics Research.

Competitive pressures, rising broadband and mobile traffic, and video and IPTV opportunities will continue to drive carriers to upgrade their networks, which will keep the optical market healthy for the next 5 years, but the shift from SONET/SDH to WDM will keep overall optical network hardware revenue flat for the next several years.

Market Highlights

--  Worldwide optical revenue is forecast to reach $12.2 billion in 2010
--  Alcatel-Lucent held 1st place in 2006 worldwide optical network
    hardware revenue market share, followed by Huawei then Nortel
--  Siemens leads the worldwide long haul WDM ROADM switch revenue market
    share; Cisco leads in metro ROADM
--  North America makes up 35% of the worldwide optical network hardware
    market, EMEA 33%, Asia Pacific 27%, and CALA 6%
    

Infonetics' report provides market share, market size, and forecasts for metro and long haul optical equipment, broken out by SONET/SDH vs. WDM, with transport and switch splits, DWDM and CWDM splits, and ROADM/non-ROADM splits. Forecasts and regional market share are updated quarterly and cover all regions.

The report tracks ADTRAN, ADVA Optical, Alcatel-Lucent, Ciena, Cisco, Corrigent, ECI Telecom, Ericsson, Fujitsu, Huawei, Infinera, Meriton, NEC, Nortel, Siemens, Tellabs, Transmode, Tropic, Turin, Zhone, ZTE, and others.

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. 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 and Co-Founder Infonetics Research 408-583-3351 Email Contact