Info Image

WDM Continues to be the Growth Engine for Optical Equipment Market Despite Overall Slowdown: IHS Markit

WDM Continues to be the Growth Engine for Optical Equipment Market Despite Overall Slowdown: IHS Markit Image Credit: IHS Markit

The global optical network hardware revenue totaled $3.1 billion in the first quarter of 2018 (Q1 2018), declining 25 percent sequentially and remaining flat on a year-over-year basis, according to the latest report by IHS Markit.

After a strong close to 2017, the optical equipment market got off to a lackluster start in 2018, said IHS Markit. Total optical equipment market spending was down 25 percent on a sequential basis, with all regions seeing quarter-over-quarter declines.

Wavelength-division multiplexing (WDM) continues to be the growth engine for the market. In Q1 2018, the WDM segment totaled $2.9 billion, up 3 percent year-over-year, thanks to gains in EMEA and Asia Pacific. Both the metro and long haul segments experienced low single-digit year-over-year growth in Q1 2018.

Synchronous optical networking (SONET)/synchronous digital hierarchy (SDH) continued its overall decline; global revenue came to $206 million in Q1 2018, down over 25 percent year over year. This segment represented less than 10 percent of the total optical network equipment market in the quarter.

Huawei continued to lead the total optical equipment market by a wide margin in Q1 2018. Nokia secured second place based on continuing strength in EMEA and increasing business in Asia Pacific. Ciena maintained its leadership position in North America and remained number three overall in the global market. ZTE rounded out the top four, but faces a difficult journey ahead with the impact of US sanctions and a subsequent halt in major operations.

IHS Markit anticipates a continuing ramp in network capacity to address growing bandwidth demand. In the metro, the primary driver is burgeoning bandwidth demand—to, from and between data centers.

Not to be ignored is the coming broader introduction and adoption of consumer 4K and higher video content and services on a variety of devices. The shift from data to video to virtual reality (VR)/augmented reality (AR) will add yet another set of bandwidth-intensive and latency-sensitive services to the mix toward 2022.

Finally, a further evolutionary shift in mobile network architectures in preparation for 5G and a range of new fixed and mobile machine-to-machine (M2M) and Internet of Things (IoT) applications will set the stage for an investment cycle at the farthest reaches of the optical access network.

Based on these industry trends, the optical equipment market will grow at a CAGR of 4.5 percent from 2017 to 2022, according to IHS Markit forecasts.

Author

Ray is a news editor at The Fast Mode, bringing with him more than 10 years of experience in the wireless industry.

For tips and feedback, email Ray at ray.sharma(at)thefastmode.com, or reach him on LinkedIn @raysharma10, Facebook @1RaySharma

PREVIOUS POST

Doubling of LATAM’s OTT Voice Users by 2020 to Further Erode Mobile Voice Revenues: GlobalData

NEXT POST

Public Carsharing Fleet to Reach 971,000 Vehicles Globaly in 2025