Although metro WDM spending remains strong amongst top service providers, the optical transport equipment market declined year-over-year to $3.1 billion, said Dell'Oro Group. The research firm attributed the drop to slower sales in the quarter in all technology segments with the exception of WDM metro equipment.
CenturyLink has set an aggressive SDN and NFV network plan, announcing that it will virtualize 40 percent of its global IP core network by the end of this year and plans to have full global virtualization of its IP core network and data centers by 2018.
Ciena reported that its fiscal third quarter 2015 income rose 19 percent to $23.6 million amidst a drop in revenue due to delays at a number of its large Tier 1 service provider customers.
In the metro WDM market, three vendors-- Ciena, Huawei and ZTE-- have taken the dominant position by grabbing over 10 percent share of the market each, according to a new Dell'Oro Group report. On a combined basis, these three vendors hold a market share of 50 percent.
Ciena has completed its acquisition of Cyan, a deal that immediately enhances its software defined networking (SDN) and network functions virtualization (NFV) plans. With the acquisition now completed, Ciena said it will unify the software activities of both companies under a single brand that will be known as the Blue Planet division.
WDM vendors like Alcatel-Lucent, Ciena and Cisco will continue to see revenue benefits over the next four years as more service providers upgrade their metro networks, a segment that Dell'Oro says will grow at a 10 percent CAGR. Demand for metro WDM capacity will drive up the overall optical transport revenues to $15 billion by 2019.
Although the optical equipment market is becoming increasingly fractured between companies that are focused on one of three markets--traditional service providers, competitive service providers or Internet content providers--three companies are leading the way. According to the 2015 IHS Infonetics Optical Network Hardware Vendor scorecard, which profiles the top vendors in this space, Ciena, Cisco and Infinera have the strongest market presence and momentum.
A top Cisco executive sees a host of ongoing opportunities to equip its service provider customers with 100G optical switching and optical gear. Speaking during the Cisco Financial Analyst day, Kelly Ahuja, SVP, Service Provider Business, Products and Solutions for Cisco, said that they are seeing more of its service provider customer base migrate their core and optical networks to 100G.
Ciena's move to diversify its customer base beyond large Tier 1 service providers like AT&T and Verizon continued to pay off in its fiscal second quarter of 2015 as revenues rose year-over-year to $621.6 million.
If Ericsson were to purchase Ciena or Juniper, the argument is that it could bolster its lagging wireline portfolio, but one Citigroup analyst says that neither deal is likely to happen.