The optical communications hardware market continues to surge thanks to spending by cloud and colocation operators, according to a report by Cignal AI.
Cloud and colo spending increased more than 50% in the first quarter in North America, which helped offset declines in other regions. Cignal AI's Optical Customer Markets Report said Ciena continued to lead all of sales of optical gear to cloud operators in North America.
Huawei is the market leader in Asia Pacific, EMEA and CALA regions. In the EMEA region, traditional telco, which includes incumbent and wholesale network operators, optical spending rebounded in the first quarter and is expected to grow by double digits the rest of the year. During the first quarter, Ciena led the North America region.
“Optical spending in North America continues to shift from traditional telco providers to the cloud and colo operators,” said Cignal AI's Scott Wilkinson, lead analyst for optical hardware. “Despite traditional telco operators accounting for most spending, the rapid growth in cloud spending combined with traditional operators now adopting cloud architectures has permanently changed supplier R&D priorities.”
Other highlights from the report included:
• Ciena Waveserver Ai's market share continued to increase as cloud and colo spending grew. New compact modular platforms targeted at these areas will start hitting the market in the second quarter with Cisco, Infinera and Nokia among those expecting stronger sales in the next quarter.
• North American cable/MSO spending declined in the first quarter, but Cignal AI expects moderate growth for the remainder of the year.
• Spending in the enterprise and government sectors showed pressure from consolidation and cloud and colo encroachment and isn’t expected to recover in the next two years, according to Cignal AI.