Optical networking market spend reaches highest level in three years

MELBOURNE, AUSTRALIA: The global optical networking (ON) market ended 2011 with an unexpectedly strong rise in spending, according to Ovum. Preliminary results show quarterly figures reached $4.2 billion (the highest for the past three years), while total market spend for 2011 outpaced current forecasts, rising to $15.59 billion, up 8 percent from 2010.

In a new market share analysis, the independent telecoms analyst reveals that the healthy seasonal upswing was driven by strong results in the Asia-Pacific and South and Central America (SCA) regions, up sequentially and year over year (YoY) to $5.6 billion and $1.1 billion, respectively, for full-year 2011. EMEA also performed better than anticipated.

“In our 3Q11 report we noted that results in China were likely to play a big role in whether the year ended in a bang or a whimper, and it appears we got sizzle not fizzle from China in 4Q11,” said Dana Cooperson, VP of Ovum’s network infrastructure practice. “Also, fears that flooding in Thailand would have a negative impact on 4Q11 revenues were largely unfounded, and while there was no immediate catastrophe in Europe, problems are still ongoing.”

However, the continued improvement of the global market in 2011 was not echoed across all regions. North American spending fell back sequentially and YoY in 4Q11, to finish the year down to just over $4 billion in total.

“In what is becoming a reliable seasonal trend, the biggest North American carriers turned off the spending spigot at the end of the year, virtually wiping out market spending gains from earlier in the year,” explained Cooperson.

In terms of the vendor picture, ZTE was the biggest share winner for the second year running, gaining 1.8 share points in 2011 to go with the 3.3 share points it gained in 2010. ZTE has been steadily growing share and continuing to solidify its third ranking, posting over 10 percent share for the first time in 4Q11.

“In 2012, we expect ZTE to expand out of the product segments and regions where it has been strongest. We also believe Metro WDM growth should be the company’s ON strategic focus if it is to continue this run of prosperity,” says Cooperson.

Other share winners in 2011 included Ciena, FiberHome, Cisco, NEC, Ericsson, and Fujitsu, in order of most to least gain. Based on preliminary estimates, the most notable share gain is FiberHome as it joins the top 10 ON vendors for the first time, relegating Tellabs to 11th rank. Meanwhile market leaders Huawei and Alcatel-Lucent topped the list of share losers for the year – the only two of the top vendors to lose share two years in a row.

“Despite their performances this quarter, we can see that Alcatel-Lucent is pushing its leading 100G position and its integrated OTN solution hard to gain ground. Also we expect Huawei to come out strong in 2012 with its newly-available 100G, as it did with 40G in 2009,” concludes Cooperson.