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Infonetics: Optical network equipment market up 8% in 4Q11

21 February 2012
Worldwide spending on optical equipment, including WDM and SONET/SDH, increased 8% in the fourth quarter of 2011 compared to the previous quarter, reaching $3.6 billion, according to the latest Optical Network Hardware report by market research firm Infonetics Research.
For the full year 2011, the overall optical network hardware market is up 9%.
In 2011, WDM optical spending grew 22% while SONET/SDH spending shrank 6%, as carriers continued to abandon investments in legacy technology in favour of ROADMs, coherent optics, packet-optical transport, and Optical Transport Network (OTN) equipment.
Infonetics reports that ROADM spending is particularly strong, and is now on a seven-quarter streak of consecutive gains, with shipments up a stunning 36% in 2011 over 2010.
Some geographic regions shone while others faltered. "Regional spending trends for optical network hardware were volatile in the final quarter of 2011, with North America down and the rest of the regions up sequentially, including a huge 63% gain in Latin America – a region showing very positive long-term trends," noted Andrew Schmitt, directing analyst for optical at Infonetics Research.
Schmitt continues, "While the typical end-of-year budget flush failed to materialize in North America with AT&T and Verizon spending less, it did appear in full effect in EMEA, particularly Europe, up almost 11%.”
However, in EMEA the surge in spending was mainly due to an increase in legacy SDH spending rather than of advanced WDM gear – a telltale sign of a capex slowdown, according to Schmitt. “Rising legacy spending is a negative leading indicator, as is the reversal in EMEA's rolling four-quarter revenue, which turned negative in 4Q11 after only two quarters of gains,” he said.
In the fourth quarter of 2011, the largest optical vendors benefitted most – with the exception of Cisco – including Huawei (up 35%), Alcatel-Lucent (up 20%), and Ciena (up 10%).  Notably, both Ciena and Infinera bucked the North America down-trend with positive quarterly optical revenue.
By Pauline Rigby