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Optical networking market reaches $14 billion

The global optical networking market is continuing solid growth in 2008, with metro WDM showing the strongest demand.

Worldwide optical networking revenues in Q1 lifted 16% year over year, demonstrating continued and stable growth in this market after a huge Q4, particularly in the metro WDM market. By the end of 2007, the optical networking market reached $14.2 billion and is still growing.

IDC continues to see huge growth in the metro WDM market, which was up 51% year over year.
Eve Griliches
IDC Program Director, Telecommunications EquipmentIDC

In general the optical market continues to show "lumpiness" with Q2 and Q4 being the larger quarters, and Q1 and Q3 being down or slow quarters in nature.

IDC continues to see huge growth in the metro WDM market, which was up 51% year over year, demonstrating the strong demand for ROADM in core regional networks as well as the emerging access segment. The Metro WDM market was strongest across North America and EMEA this past quarter, with Tellabs and Nortel taking share in North America.

Notable increases for Q1 2008 go to Fujitsu and Tellabs, reflecting the early AT&T purchasing this year and continued Verizon deployments. In a down quarter, both vendors were up quarter over quarter, as well as year over year. Ciena while up slightly over last quarter, has done remarkably well year over year.

This quarter Tellabs has recognized revenues from its 7100 Optical Transport Systems, and shipped and taken first place in the ROADM market of Metro WDM with 43% market share. With Fujitsu not far behind climbing to 22% market share in a huge quarter for them, mostly due to AT&T.

Cisco has held relatively flat quarter over quarter. We believe a large segment of its ROADM goes to enterprise deployments, and at IDC, we expect Cisco will do something (M&A?) to jump into this growing market to meet service provider demands, which are clearly reflected on the success of Fujitsu and Tellabs to date.

AT&T and Verizon have been clear they are spending huge amounts of money in the next few years on regional metro and long haul optical deployments.

Worldwide ROADM (subset of the metro WDM) revenue by vendor, 2007 and 1Q08
2007 1Q08
Revenue ($M) Share (%) Revenue ($M) Share (%)
Tellabs 197 104.8 107 43.1
Cisco 350 186.2 95 38.3
Fujitsu 112 59.6 54 21.8
Transmode 68 36.2 20 8.1
ADVA 90 47.9 18 7.3
Nortel 14 7.4 15 6.0
Huawei 37 19.7 13 5.2
NEC 33 17.6 11 4.4
Alcatel 46 24.5 8 3.2
OpVista 34 18.1 6 2.4
ECI 13 6.9 3 1.2
Other 13 6.9 6 2.4
Total 1,007 535.6 249 100.4

About the author: Eve Griliches is a Program Director within IDC's Telecommunications Equipment group. She provides in-depth insight and analysis on service provider routers and switches as well as the optical networking market. Ms. Griliches also provides critical business intelligence on emerging technology trends and their impact on the overall telecom market space. Ms. Griliches joined IDC in 2005 after 10 years in product management for a number of network equipment vendors. Most recently she worked at Marconi, as well as PhotonEx a start-up in the 40Gb/s optical long haul market. Prior to that, Ms. Griliches held positions at Wellfleet/Bay Networks/Nortel Networks in the Carrier Routing Division with strong interworking with Nortel's Optical groups. Additionally, she spent 4 years at Thinking Machines Corporation, one of the first parallel processing supercomputer companies.

This was last published in June 2008

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