Long-haul WDM spending surpassed metro WDM in Q2, says research firm

(Image source: IHS Markit)

The pendulum in the WDM market has swung towards the long-haul segment, with spending in the second quarter rising 23 percent sequentially and 18 percent from a year ago.

China, according to an IHS Markit research note, has been leading the optical spending trend. According to the research firm, China’s optical market grew 41 percent sequentially and 22 percent year-over year and now comprises over a quarter of global optical gear spending in the quarter.

Due to carrier spending on 100G long-haul WDM and what IHS said was a “spending spree” by China-based service providers like China Telecom and China Unicom, the global optical network equipment market grew 15 percent sequentially in the second quarter and 7 percent from the year-ago quarter, to $3.5 billion.

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In the second quarter, the WDM equipment segment notched gains of 13 percent quarter-over-quarter and 10 percent year-over-year as 100G long-haul deployments accelerated and 200G+ deployments started to ramp. IHS said that WDM long haul comprised just over half of WDM spending in the quarter.

One of the vendors that’s benefited from China’s spending cycle along with increases in EMEA (Europe, Middle East, Africa) and CALA (Caribbean and Latin America) is Huawei. The Chinese vendor saw revenues climb 41 percent year-over-year in the second quarter, while taking a 32 percent share of the overall optical hardware market.

The metro market was a different story as revenues rose only 2 percent year-over-year.

Despite the near-term slowdown, IHS Markit said that it “expects metro WDM growth to pick up toward the end of 2016 as new metro data center interconnect (DCI)-oriented products start shipping in volume and as major metro deployments in North America—principally by Verizon—begin to ramp.”

In 2015, Verizon announced it was deploying Nokia’s wavelength routing technology, a move that it said would allow it to adjust wavelength connections, automate tasks on a wide scale, and identify and route around faults in fiber infrastructure along its long-haul network routes.

While WDM is certainly the focus for service providers’ optical network roadmap, the SONET/SDH segment rose sequentially in the second quarter due to service provider project-specific spending. However, IHS said, the SONET/SDH market maintained its longer-term overall decline with spending down 8 percent year-over-year.

For more:
- read this report

Related articles:
Long haul, metro DWDM grew 20 percent year-over-year, says analyst firm
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