Alcatel, Huawei, and Nortel top 3Q06 optical networking market

Nov. 15, 2006

NOVEMBER 15, 2006 -- "We continue to see growth in builds by non-traditional customers--including mobile operators, MSOs, enterprises, research and education institutions, governments, and utilities--as well as network expansions by the more traditional telcos," notes Ovum-RHK's Dana Cooperson.

NOVEMBER 15, 2006 -- Ovum-RHK (search for Ovum-RHK) recently announced its preliminary analysis of third-quarter 2006 results for optical networking equipment vendors. In 3Q06, revenues were $3.1 billion, up 13% versus 3Q05 and up 5% versus 2Q06, say analysts.

The report provides highlights of the top ten vendors:

• Alcatel's (search for Alcatel) revenues were up 27% sequentially and up 21%versus 3Q05 to lead the market both in 3Q06 and in annualized share. The vendor captured a 16.8% market share with its $516 million in sales.

• NEC's (search for NEC) revenues were up a stunning 55% sequentially and 34% year-on-year; it increased sales in all regions and product segments in which it competes to edge out Cisco (search for Cisco) for ninth market position (rolling 4Q share).

• Lucent's (search for Lucent) sales grew 11% in the quarter but declined 7% versus 3Q05, dropping from fourth to fifth place (rolling 4Q share).

• Nortel's (search for Nortel) revenues increased 5% sequentially and 8% versus 3Q05 to remain in third place with a 10.1% market share (4Q rolling share).

• Huawei's (search for Huawei) revenues dropped 27% sequentially off a huge 2Q06 but were up 24% versus 3Q05 to remain number two, with a 9.5% annualized share.

"Global spending continues to grow as bandwidth required for broadband wireline and mobile applications puts pressure on operators to both expand existing networks and build new ones," explains Dana Coooperson, vice president of optical networking and practice leader, Network Infrastructure at Ovum-RHK. "We continue to see growth in builds by non-traditional customers--including mobile operators, MSOs, enterprises, research and education institutions, governments, and utilities--as well as network expansions by the more traditional telcos," she notes.

Moreover, says Cooperson, the softness that Ovum-RHK reported in 2Q06 spending for multi-service SONET/SDH devices has widened to include all three major regions, with "mounting evidence that the shift in spending away from SONET/SDH devices to metro WDM in the metro core has begun." Only the CALA region bucked the trend this quarter. That said, the multiservice SONET/SDH market remains about three times the size of the metro WDM market, says Cooperson, and there is little evidence that Layer 2 switches are cutting into SONET/SDH sales.

For more information about Ovum-RHK's Optical Networking advisory services, visit Ovum-RHK.