Thursday, February 28, 2013

Modest ON market growth through 2018 despite whimpering 4Q12 results

AUSTRALIA: Global optical networking (ON) spending versus the year-ago quarter receded for the fourth consecutive quarter in 4Q12, finds Ovum. While some pockets of growth remain, spending in 4Q12 versus the year-ago quarter was down in every region, and the market remains mired in recession.

In a new market share analysis, the global industry analysts reveals annualized revenue versus the year-ago period was down for the third consecutive quarter, falling 6 percent from the 4Q11 level.

The market finished 2012 at nearly $14.6 billion, more than $1 billion lower than 2011. According to Ovum, annual spending in Asia-Pacific was up 3 percent from the 2011 level, but not enough to offset declines of 13 percent in North America, 12 percent in EMEA, and 3 percent in South & Central America.

“The current downturn is being driven by several factors including faltering economic growth in Europe and the US, lower pricing due to intense vendor competition, and a quickening in the shift in spending away from TDM aggregation equipment,” says Ron Kline. “Guidance from vendors is cautiously optimistic, with good short-term visibility into order growth, while long-term vision on customer spending patterns remains cloudy.”

Ovum believes the market pressures prevalent in 2012 will likely continue to influence the market into 2013.

In terms of vendor performance, FiberHome was the biggest share winner for the year as the company gained 1 share point while market leader Huawei gained 0.9 points. Other share winners in 2012 included Ciena, ZTE, NEC, Ericsson and Cisco in order of most to least gain. Alcatel-Lucent, Fujitsu and Nokia Siemens Networks (NSN) saw market share decline in 2012.

“All is not lost, even with four uninspiring quarters of 2012 behind us; Ovum’s forecast predicts 2 percent growth globally for 2013 with the ON market surpassing US$17.1bn in 2018. Overall Ovum foresees strong growth in SCA, modest growth in Asia-Pacific and low growth in EMEA, North America and submarine line terminal equipment sales,” concludes Kline.

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