Infonetics Research reveals in its latest Optical Network Hardware vendor market share report that the first quarter of 2012 saw optical network systems revenues plummet 23% worldwide, to $2.8 billion. The market research firm says the shrinkage was particularly acute in Europe, which reportedly suffered its worst optical communications capex quarter in five years.
The overall picture perhaps looks worse than it appears, in light of the optical network hardware market's previous strength, notes Infonetics. Still, the firm contends market's situation in Europe is shading toward grim. "While optical hardware revenue trends in all world regions were not positive in the first quarter of 2012, the most alarming development is that year-over-year in EMEA -- particularly Europe -- spending on WDM optical equipment decreased faster than spending on legacy SDH equipment," explains Andrew Schmitt, principal analyst for optical at Infonetics Research.
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Unlike other areas of the world, Europe doesn’t show much near-term upside, either, according to the research. Schmitt adds, "This is not the behavior of a region experiencing only a minor quarterly pullback. By contrast, the trend in North America was the opposite, with carriers cutting spending year-over-year but allocating towards forward-looking technology investments like WDM equipment and ROADMs." In fact, ROADM optical equipment spending was flat in 1Q12, which Infonetics considers “an achievement” considering this niche posted a record quarter in 4Q11.
Some companies are weathering the storm better than others, finds the firm. For example, Fujitsu and Ciena outperformed competitors in North America, while in Asia NEC and Fujitsu enjoyed 28% gains in 1Q12 from the year-ago quarter. Aside from NEC and Fujitsu, the relative winners in outperforming the market were smaller companies such as Infinera, ADVA, and Transmode, as stated by the firm.
"EMEA and North America are both now trending downward on a rolling fourth-quarter basis, and Asia Pacific is flat," continues Schmitt. "Still, conversations with vendors and carriers lead us to believe that spending in North America will resume moderate growth and we are forecasting solid gains in optical spending in China this year in large part due to our recent visits with Chinese carriers. But Europe is a tough call, with macroeconomic trends there not providing much hope and evidence that some service providers there are battening down the hatches."