Bandwidth demand driving ON equipment sales upwards

Gordon Peters
Wednesday, 17 November 2010 19:37

IT Industry - Market

The continuing need for bandwidth is expected to drive global sales of optical networking (ON) equipment, with an upbeat long-term forecast predicting the ON market will reach $20 billion by 2015 with a five percent CAGR.

In a research report released today, independent analyst firm, Ovum, says that, based on the research, EMEA's results are expected to turn positive in 2011, while North America and Asia-Pacific will be enough to start the global turnaround in 2010, which will gain momentum in 2011 as EMEA transitions to positive growth.

According to Ovum principal analyst, Ian Redpath, Asia-Pacific is now the number one region for ON sales, 'driven by a mobilizing China.'

Ovum reports that the top six vendors generating highest sales in the APAC region are Huawei at number one, with a market share of 43%, ZTE with 16%, Alcatel-Lucent with 9%, NEC with 7% and FiberHome and ECI with 4% each.

'The big driver in the region continues to be China. Japan has completely flattened out and has been overtaken by India. In China, the mobile market is the major investment driver both for cell tower connectivity and the backbone core.  Ovum expects this trend to continue for the foreseeable future,' Redpath says.

However, Ovum asks the question: Can mobile networks alone continue to support the huge ON growth rates we have seen recently? And, Ovum's view is that a second application wave will be needed to support high ON growth rates in the future.

To back up this prediction, Redpath says that the second application wave for China could be enterprise Ethernet services. 'China has a modest level of enterprise Ethernet penetration so far. Global corporations that have operations in China desire high-speed Ethernet connections. To accommodate them, global carriers are adding more mainland China gateway cities to their networks. China Telecom is currently evaluating a carrier Ethernet transport solution for its next-generation network upgrade. Enterprise Ethernet is poised to add to the bandwidth requirements of the optical network core within China', Redpath adds.

According to Redpath, Japan is overdue for a network refresh, and he says ON funding has been subsisting at 2003 levels, and the capex squeeze can only continue for so long before the bandwidth fundamentals necessitate a fresh round of network upgrading.

Ovum reports that while Japan has stagnated, India has grown, overtaking Japan for the number two spot within Asia-Pacific. The firm also finds that the Indian ON market has outside-in drivers from global corporations that want to do more business in India and require high-speed telecom service connections. It says that the global carriers are responding with expanded PoPs in India and capacity into and out of India, while domestic players BSNL, Tata, and Reliance Globalcom are also growing their internal and global profiles.