Infonetics: WDM spending in North America, CALA heats up

JUNE 5, 2008 -- Communications market research firm Infonetics Research (search for Infonetics) reports that sales of worldwide optical network hardware were down 10% sequentially in 1Q08 to $3.5 billion, due to normal seasonal downturns in the Asia Pacific and EMEA markets.

According to Infonetics' report, Optical Network Hardware, the optical network hardware markets in North America and Caribbean/Latin America (CALA) were up in 1Q08, with CALA posting especially strong WDM optical revenue results.

"The first large WDM buildouts started in CALA in 1Q08, causing a 92% jump in WDM optical spending there. CALA service providers spent 51% of their 1Q08 optical dollars on WDM versus 49% on SONET/SDH, and North American carriers spent 54% on WDM, making CALA and North America the first regions to pass the 50% mark in quarterly WDM spending. The shift in spending from SONET/SDH to WDM continues to gather steam, as more service providers launch IP transformation projects and invest in optical networking gear to accommodate massive increases in corporate network traffic and storage networking, consumer broadband including IPTV and IP video, and service provider mobile network backhaul," said Michael Howard, principal analyst at Infonetics Research.

Other highlights from the report include:

• Although the worldwide optical network hardware market is seasonably down for the quarter, it is up 18% year-over-year from 1Q07 to 1Q08.
  
• The biggest driver for the down quarter was the predictably weak performance by some of the biggest players in the business, including Alcatel-Lucent, Cisco, Huawei, Nokia Siemens, Nortel, and others.
  
• Other vendors bucked the seasonal trend and finished up for the quarter, including ADVA, Ciena, Infinera, NEC, Tellabs, and others.
  
• Worldwide sales of packet optical transport system hardware now make up 12% of total optical revenue in 1Q08, and will continue to increase in share.
  
• Infinera posted an 82% spike in worldwide ROADM equipment sales in 1Q08, allowing it to jump ahead of Nokia Siemens and Cisco to first place.
  

Infonetics' report provides market share, market size, and forecasts for metro and long-haul optical equipment, broken out by SONET/SDH (with transport and switch splits) vs. WDM (with ROADM and DWDM and CWDM transport splits). The report now tracks packet optical transport systems as well.

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