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Dell'Oro Report Puts Optical Transport Equipment Market Down

August 27, 2012

Dell'Oro Report Puts Optical Transport Equipment Market Down

By Steve Anderson
Contributing TMCnet Writer

The Dell' (News - Alert)Oro Group, regarded as one of the biggest names in market information for networking and telecommunications, recently issued a report featuring some disturbing news: the Optical Transport equipment market, for the first half of this year, lost about 5 percent over the same time the previous year.

The Dell'Oro report revealed that the Optical Transport market had contracted year over year to $6.1 billion, largely due to greatly decreased spending in mature markets like the EMEA corridor and North America. Vice president of Optical Transport research for Dell'Oro, Jimmy Yu, elaborated that the only reason the market didn't see worse declines was thanks to the purchasing efforts of emerging markets like the Asia-Pacific region and Latin America, who managed to put up sufficient numbers to offset the crashing purchase numbers from the more mature markets.

Indeed, without Asia-Pacific and Latin American numbers, the overall picture would have been substantially worse. While North America saw a 12-percent growth rate year over year, and the EMEA corridor saw 16-percent growth, the Asia-Pacific region posted 7 percent, and the Latin America / Rest of World market saw an 11-percent gain, leading to an adjusted worldwide growth rate of 5-percent, as previously mentioned.

Additionally, the Dell'Oro report revealed that 20 percent of the worldwide optical market for the first half of 2012 is concentrated in the hands of just one company: Huawei (News - Alert). Given Huawei's proximity to one of the only markets to see positive growth, the Asia-Pacific market, this shouldn't come as too much of a surprise.

Further, despite losses in the overall market, the demand for WDM equipment actually rose in the first half of 2012 compared to the same time a year ago as demand for 40 / 100 Gbps equipment rose.

To top it off, Optical Packet products actually saw growth in their market as well, contributing nearly one-third to the overall total.

While the market itself isn't looking good, there are still bright spots in the field to improve. Slowing in mature markets has to be expected to some extent – they've got what they need in many cases – but at the same time, this problem is exacerbated by continued weakness across the overall economy, especially in the Eurozone, a large portion of the EMEA market.

Developing markets can be counted on to buy even in slowdowns – they still develop, after all, just at slower paces – so that makes the whole picture make that much more sense.

Either way, the overall market for Optical Transport isn't looking the greatest right now, though with continued innovation and a way to make mature markets developing ones once again, it's a safe bet that improvements will carry on apace.

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Edited by Braden Becker
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