Service provider spending pause drives 15% decline in optical network market

fiber optical (Pixabay)
One anomaly was Asia Pacific, where spending rose 2% year over year.

As service providers throttle spending on optical gear, it is affecting the broader global optical equipment market revenue mix.

IHS revealed in its third-quarter report that the optical equipment market dropped 15% quarter over quarter and 3% year over year as three key regions—North America, Latin America and EMEA—reduced spending.

However, one anomaly was Asia Pacific, where spending rose 2% year over year.

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Heidi Adams

Heidi Adams, senior research director of IP and optical networks for IHS Markit, said in a research note that “soft growth in the Asia-Pacific region was not sufficient to offset the declines in EMEA, North America and Latin America.”

From a technology perspective, IHS said the WDM segment declined “slightly” on a sequential basis but rose 3% year over year. However, long-haul WDM was down 9% from the same period a year ago.

Adams said that the metro segment remains a bright spot in the overall WDM market.

“The metro WDM segment fell slightly quarter over quarter, but increased 3% year over year, supporting our view that this will be the main growth vector for the market moving forward,” Adams said.

In the vendor arena, Huawei maintained the top spot during the quarter in the face of revenue declines.  

“Huawei remained the optical equipment market leader in Q3 2017 despite a significant seasonal drop in revenue both sequentially and year over year,” Adams said. “Tepid spending in Western Europe was responsible for a large part of Huawei’s overall decline in the quarter.”

Ciena took the number two spot by revenue globally and held onto its number-one position in North America.

Ciena “continues to be the dominant optical equipment vendor in North America, and it also made notable progress outside its home market in Q3 2017 with strong year-over-year gains in EMEA, Latin America and Asia Pacific,” Adams said.