Ciena, Infinera and Adva are diversifying their businesses to include data center providers that are looking for high capacity gear to interconnect their facilities, according to a report from Infonetics Research.
Andrew Schmitt, principal analyst for carrier transport networking at Infonetics Research, noted that Adva, Infinera and Ciena had strong results in 2014 due to increased data center spending.
Case in point is Infinera. The vendor recently announced a deal with Equinix, which is using its DTN-X to provide optical networking connectivity between three locations: Frankfurt, Toronto and Singapore.
During the recent Stifel Technology, Internet & Media Conference, Infinera's CEO Tom Fallon said that AT&T (NYSE: T) and Verizon (NYSE: VZ) aren't the sole barometers on how the telecom industry is advancing next-gen networks.
"The industry focuses too much specifically on what AT&T and Verizon are doing," Fallon said. "For a long time they really defined network architectures and defined how much money was going to be spent in the industry, but I think that day is gone. "
In its fourth quarter of 2014 (4Q14) and the full-year 2014 Optical Network Hardware report, Schmitt said that the North Ameican optical market "diverged sharply in 2014, with strong results from Adva, Infinera and Ciena balanced by major weakness at traditional vendors like Alcatel-Lucent, Fujitsu and Coriant."
What helped set apart Adva, Infinera and Ciena is that this group isn't solely focusing all of their attention on the two largest carriers: AT&T and Verizon.
"The pattern here could not be clearer: companies whose fortunes are tied to traditional carriers are underperforming. Yet the press and investor echo chamber's fascination with AT&T and Verizon spending inexplicably remains," Schmitt said.
According to Infonetics, Ciena became the second largest optical vendor in the world in 2014, just edging out Alcatel-Lucent, while Huawei remains No. 1. However, Infinera, which Infonetics said was the fastest growing optical company in the West (North America and EMEA combined), grew revenue 23 percent over 2013, followed by Ciena at 12 percent.
Meanwhile, Cisco's optical revenue was up 2.4 percent for the year as the company seeks customers for its NCS 4000 platform and re-orients sales efforts due to the rapidly changing tastes of traditional customers in the enterprise and data center markets.
Overall, the global WDM optical hardware revenue is up, SONET/SDH gear revenue declined 25 percent in 2014. On a combined basis, the WDM and SONET/SDH optical network equipment market totaled $3.2 billion in Q4 2014, up 7 percent sequentially, and up 3 percent from the year-ago quarter. For the full year, the overall optical network hardware market ended down 1 percent in 2014 over 2013.
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