Cisco’s North American optical growth driven by metro deployments, says analyst

fiber optical (Pixabay)
Outside of the U.S., optical market growth trends are more of a mixed bag.

Cisco can add metro optical to its list of segments where it remains a dominant player in North America, a feat it achieved due to strong shipments in cloud and colocation as well as the growth of its NCS 4000 platform.

Joining Cisco in leading the North American metro WDM market was Ciena, which also saw year-over-year growth. Ciena will report its earnings next Thursday while Cisco revealed it saw some weakness in service provider spending during the recent quarter.

“Among optical hardware manufacturer growth in North America, Cisco was on top,” said Andrew Schmitt, lead analyst at Cignal AI, in a release. “The company enjoyed double-digit year-over-year growth resulting from a massive ramp of shipments in the cloud and colo market as well as growth in NCS 4000 revenue.”

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The research firm said a key particular area of optical market growth came from coherent 100G where port shipments exceeded 100,000 units globally for the first time this quarter.

Outside of the U.S., optical market growth trends are more of a mixed bag with EMEA and Latin America declining while the rest of the Asia Pacific (ROAPAC) seeing a near-term uptick.

During the third quarter, Cignal Al noted that EMEA revenue dipped nearly 20% year over year. One of the vendors that was affected by the decline in EMEA was Huawei, which the research firm said experienced “a very sharp decline in the region and provided negative guidance.” Due to softer spending in EMEA, Cignal Al reduced its forecast for the region for this year and 2018.

Although China’s revenue growth stalled in the third quarter, Cignal Al said overall spending for 2017 is forecast to finish strong. Despite this longer-term outlook for the year, ongoing uncertainty tied to regional spending drove the research firm to cut its China forecast.

In the rest of the Asia Pacific (ROAPAC) spending was trending higher. But after seeing a big leap in the second and third quarters of 2017, Cignal AI revised its 2018 forecast due to an expectation of subsiding spending levels.

Finally, Central and Latin America spending continued to decline as large carriers in Brazil and Mexico cut back on capex. Cignal AI said after conducting conversations with vendors, it expects this decline to resolve itself and a recovery to begin in 2018.