North American cloud and colo spending on optical hardware goes negative in 3Q20: Cignal AI
While cloud/hyperscale and colocation facility operators have been seen as the primary engine of optical network hardware revenue growth for the past several years, Cignal AI says that wasn’t the case in North America through the third quarter of 2020. In fact, the market research firm states in its most recent Transport Customer Markets Report that not only have traditional communications services providers (CSPs) grown their spending more than the cloud/colo set, but that latter group’s spending turned negative year-on-year in 3Q20.
The North American cloud/colo camp’s optical network hardware spending shrank 20% versus the year-ago quarter in 3Q20, according to Cignal AI. The overall effect on the North American market was mitigated somewhat by traditional operators increasing their spend year-on-year by 2% (see chart above).
“Equipment suppliers to cloud operators report that sales in the third quarter were depressed because service providers absorbed capacity on networks that were built during the first half of 2020,” said Scott Wilkinson, lead analyst at Cignal AI. “Both incumbent and cloud operators, especially in North America, spent significantly more of their annual budget than typical in the first half of the year.”
In a tweet sent after news of the report’s release, Wilkinson indicated that the trend in North America appeared to continue in the fourth quarter of 2020 as well.
Cignal AI’s Transport Customer Markets Report covers global optical and packet transport equipment spending by end-customer market type, including incumbent, wholesale, cloud and colocation, cable MSO and broadband, enterprise, and government network operators. The report includes historical market share and market size and five-year market size forecasts.
For related articles, visit the Business Topic Center.
For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer’s Guide.
To keep abreast of fiber network deployments, subscribe to Lightwave’s Service Providers and Datacom/Data Center newsletters.
Stephen Hardy | Editorial Director and Associate Publisher, Lightwave
Stephen Hardy is editorial director and associate publisher of Lightwave and Broadband Technology Report, part of the Lighting & Technology Group at Endeavor Business Media. Stephen is responsible for establishing and executing editorial strategy across the both brands’ websites, email newsletters, events, and other information products. He has covered the fiber-optics space for more than 20 years, and communications and technology for more than 35 years. During his tenure, Lightwave has received awards from Folio: and the American Society of Business Press Editors (ASBPE) for editorial excellence. Prior to joining Lightwave in 1997, Stephen worked for Telecommunications magazine and the Journal of Electronic Defense.
Stephen has moderated panels at numerous events, including the Optica Executive Forum, ECOC, and SCTE Cable-Tec Expo. He also is program director for the Lightwave Innovation Reviews and the Diamond Technology Reviews.
He has written numerous articles in all aspects of optical communications and fiber-optic networks, including fiber to the home (FTTH), PON, optical components, DWDM, fiber cables, packet optical transport, optical transceivers, lasers, fiber optic testing, and more.
You can connect with Stephen on LinkedIn as well as Twitter.