Optical transport revenue weakens, SD-WAN jumps: Dell'Oro

Spending on optical transport equipment dwindled during the fourth quarter of 2020, while the SD-WAN market boomed, according to figures just released by Dell’Oro Group. The findings may provide more evidence of the diversity of effects the Covid-19 pandemic has had on the networking world.

For the full year of 2020, optical transport equipment revenue came in at about $16 billion, Dell’Oro noted in a press release. This represents revenue growth of just 1% overall for the global market during the year, largely a result of the sales declines that occurred particularly in the Americas during the final quarter of the year.

“Between concerns on starting new optical builds during the start of the pandemic and aggressive plans on 5G deployments that required a larger share of a service provider’s capital budget, the spending on optical transport dramatically slowed by the end of 2020,” said Jimmy Yu, Vice President at Dell’Oro Group, in the press release. “It was a really dramatic drop in optical equipment purchases in the fourth quarter. While we anticipated a slowdown near the end of the year due to concerns around COVID-19, we were surprised by a 29 percent year-over-year decline in WDM purchases in North America as well as a 12 percent decline in China. That said, there was good growth in the other parts of the world, especially Japan.”

Meanwhile, revenue among SD-WAN vendors surged by about 50% in the fourth quarter of 2020, contributing to overall growth of 32% for the full year of 2020, according to a separate Dell’Oro release earlier this week.

“The combination of pent-up demand caused by the COVID-19 pandemic and an acceleration away from legacy technologies created a surge in SD-WAN adoption during the fourth quarter,” said Shin Umeda, Vice President at Dell’Oro Group, in the release.

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He noted that Cisco continues to lead in SD-WAN market share, followed by VMware, Fortinet, Versa, and HPE/Silver Peak. The top five vendors account for about two-thirds of the revenue in the crowded market.