2012 finishes flat, but Ovum predicts modest SPSR market growth in 2013

AUSTRALIA: Global service provider switching and routing (SPSR) spending declined in the first half of 2012 before making a recovery to 2.3 percent growth in 3Q12.

The market declined again in 4Q12, however, leading to a nearly flat (-0.4 percent) result for the year. While the market contracted in three of four quarters in 2012, revenues in 4Q12 were at the second highest quarterly level ever, and Ovum expects the end-of-year improvement to carry over into 2013.

In a new market share analysis, the global industry analysts reveals 4Q12 revenue was down 0.8 percent from the year-ago period. The market finished 2012 at $14.6 billion, just $64 million lower than 2011.

According to Ovum, 4Q12 marked the fifth consecutive quarter of revenue decline in EMEA, and annual spending in the region in 2012 dropped 15.7 percent from the year-ago level. However, Asia-Pacific, the largest geographic market, was up 0.4 percent, North America 8.2 percent, and South & Central America 19.5 percent.

“A bright spot in the market is the IP/MPLS edge segment, which has had consistent revenue growth since 4Q09,” says David Krozier. “Communication service providers (CSPs) have clearly been investing more heavily in edge network elements that have the most direct impact on customer experience and network monetization.”

After declining in 2011, market leader Cisco’s share grew steadily in 2012 and the company now claims 40 percent of all SPSR market revenues. Alcatel-Lucent and Fujitsu also grew share during 2012. For Juniper, ranked fourth, 2012 was a difficult year as revenues were down 13.4 percent from 2011 and the company’s share fell 1.9 percent.

“While we don’t see a return anytime soon to the double-digit growth experienced in 2010, we do see modest growth of two to three percent returning in 2013. However, continued poor economic conditions in southern Europe could negatively impact growth as it did in 2012,” concludes Krozier.