IHS Infonetics: Global optical hardware spending rises 5% on strong WDM, 100G sales

Global optical network hardware spending rose 5 percent in the first quarter of 2015 as EMEA began to show signs of recovery and North American web-based companies continued to enhance their optical networks, according to IHS Infonetics Research.

The worldwide optical network equipment market, including WDM and SONET/SDH, was $2.7 billion in the first quarter, according to the research firm.

WDM revenue rose 9 percent globally sequentially in the first quarter, marking the eleventh consecutive quarter of growth. One of the key drivers within the WDM segment is 100G, where service providers are increasing spending worldwide, comprising around a quarter of total WDM revenue. Spending on 100G WDM platforms is benefitting a number of key optical vendors, including Alcatel Lucent (NYSE: ALU), Ciena, Cisco, Huawei and Infinera.

One of the key shifts in the market is the increasing focus on enhancing the metro optical network.

"The focus in optical networking is now shifting to the metro as new products targeted specifically at this market are announced and scheduled for production," said Andrew Schmitt, research director for carrier transport networking at IHS Infonetics, in a release. "This will allow datacenters and traditional service providers to more rapidly adopt metro 100G in a significant way."

In North America, new optical networking equipment revenue growth is being driven by Internet content providers building their own networks by purchasing their own dark fiber. Today, this segment represents nearly one-tenth of the region's optical spending, but Infonetics says that "volatility in future expenditures is likely."

Schmitt said the North American optical market is breaking up into two segments: traditional telcos and web-based companies, each of which have their own optical transport needs and requirements.

"Webco spending is growing faster right now, so vendors are repositioning to align road maps and marketing with their needs," Schmitt said.

After seeing two consecutive quarters of year-over-year growth, Europe is coming out of an optical spending slump.

Infonetics said that Alcatel-Lucent is reaping the rewards of Europe's spending pattern. The vendor reported that shipments of 100G represented 47 percent of total WDM line cards shipments compared to 31 percent in the first quarter 2014, for example.

For more:
- see the release

Related articles:
Infonetics: Ciena, Infinera, Adva benefit from uptick in data center spending
Infinera's Fallon: Industry focuses too much on AT&T, Verizon's spending patterns
Optical gear spending drops 5% as traditional providers tighten spending strings
Verizon sees value in transforming network to IP, fiber, but conversion challenges remain

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