Increased network traffic boosts optical-networking-equipment market

The worldwide next-generation optical-networking-equipment market generated $9.2 billion in 2000 and is expected to jump to nearly $40 billion by 2005, driven by the proliferation of the Internet and the demand for increased bandwidth and functionality, according to a new study by Frost & Sullivan (San Jose). The metropolitan-equipment market is forecast to reach $13 billion in 2005, up from $200 million in 1999.

Despite concerns about a reduction in capital spending, the optical-networking market should see robust growth as service providers replace their obsolete designs with next-generation equipment in an attempt to meet bandwidth demand and remain competitive.

Equipment manufacturers will be able to exploit this growth opportunity by supplying solutions that scale network capacity, reduce bandwidth costs, feature flexible services, and integrate voice and data in an open-architecture environment that is interoperable with other vendors, say analysts.

"Service providers recognize that next-generation systems are required to integrate voice and data into one converged network infrastructure," says Mark Storm, senior analyst and program leader at Frost & Sullivan. "Next-generation equipment is necessary to offer enterprise and residential customers choices, flexibility, and customized products. This is essential if service providers want to boost revenues, decrease network costs, and improve profitability," he adds.

In the evolving market, manufacturers and service providers must collaborate to set standards for quality of service, interoperability, and network management, says the report.

"The transition from traditional SONET/ SDH to next-generation optical systems is being impacted by service-provider fears of purchasing 'future limiting' equipment," explains Storm. "Service providers must 'bet their business' on making wise equipment technology choices. If the installed equipment base is not compatible with anticipated industry standards, network costs will rise."

For more information about the report, which was published as part of Frost & Sullivan's Optical Networking Market Subscription, call 210-247-3830 or visit www.frost.com.