optical networking

Huawei ascends to optical networking prominence in $3.6B market

<Did you see the blaze of light as Huawei’s streaked past Alcatel-Lucent on its way to becoming the top optical networking equipment vendor for the first time in Q3? Upsetting long-term record-holder Alcatel-Lucent, Ovum reported Asia-Pacific markets are tearing up the market segment, especially in China, which Ovum said is propelled by 3g mobile network builds. And when China builds, Huawei benefits. Huawei now leads the optical market by almost 3%, Ovum said.

Clearly on a roll, the Del’Oro group reports Huawei is in second place in the mobile networking market in Q3, still far behind Ericsson, but Huawei’s market share went from 11% last year to 20%.

Overall, the optical networking market is down 10% compared to Q308, but global spending still totaled $3.6 billion in Q3 and a recovery appears to be in progress. Several of the top 10 optical vendors have seen improved revenue (including Cisco, Fujitsu, NEC, Tellabs and possibly Nortel), but ZTE, the other Chinese powerhouse, edged out Fujitso for #4. In the hard-knock life category, Nokia Siemens Networks (NSN) fell from #5 in Q308 to #8th, behind Tellabs, a year later. Comeback-kid Cisco also edged out Ciena to re-enter the top 10.

Ripped from the (Twitter) headlines: Ciena eyes Nortel optical/Carrier Ethernet biz

Ciena Corporation, a Maryland-based telecom equipment vendor, is chatting up bankrupt Nortel for its Optical Networking and Carrier Ethernet businesses, Nortel officials tweeted this afternoon.

Nortel Networks Corporation today confirmed that it is in advanced discussions with Ciena for the planned sale of substantially all assets within its Optical Networking and Carrier Ethernet businesses globally. The outcome of these discussions is uncertain and subject to negotiation of definitive agreements. Any agreements would be subject to a competitive bidding process to be approved by the United States Bankruptcy Court for the District of Delaware and the Ontario Superior Court of Justice.

The announcement comes as Nortel’s latest sale — to Avaya for its unified communications (UC) business — has hade barely any time to cool off…

Finally, Nortel has some advanced discussions going on for these units. Read IDC carrier infrastructure
Eve Griliches’ column on why takers for Nortel’s assets have been few and far between. Maybe Alcatel-Lucent’s recent talk of converging network layers has made Nortel’s optical and Carrier Ethernet divisions a more appealing proposition for Ciena.

Huawei gains optical market share during recession, Asia-Pac build-out

China-based Huawei is at the top of the optical networking vendor pile for the first time in Ovum’s preliminary Q1 2009 results. The bigger news is that this puts Huawei ahead of optical-stalwart Alcatel-Lucent in the first three months of the year, but not for the past 12 months overall. And while optical network spending is down compared to 2008 for the past two quarters, Asia-Pac spending was remarkably strong.

Specific reasons for Huawei’s performance are varied, but they include China’s 3G network build-out race, in which Huawei figures prominently as a vendor of choice, according to Ovum’s Dana Cooperson, VP of optical networking. And like Las Vegas, what’s sold in Asia-Pac is often deployed in Asia-Pac.

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Global optical market declines? Let’s not get global

The recession feels like it will go on and on, yet so does the demand for bandwidth. So when it comes to the optical networking market, service providers need to put their recession anxiety on hold and move bravely forward.

Yes, analyst firms have huddled and are now predicting declines for the global optical equipment industry, but this is definitely not the abandon ship mode of the 2001 optical networking crash. Analyst firms are still pointing to bright spots where growth will occur anyway, despite dismal financial credit markets and capital investment projections. It all depends on what segment of the optical market you look at.

Right before the new year, Ovum revised its optical equipment forecast downward, so rather than 11% growth in 2009, Ovum says a 5% decline is more realistic. Even so, Ovum believes the optical market will start healthy growth again in 2010 to create a market worth more than $23 billion in 2013.

It’s no surprise that Ovum sees the smallest decline in metro wavelength division multiplexing (WDM) gear since metro networking is front and center for service providers this year as they gear up – literally – to handle more high-bandwidth traffic like video closer to users.

On the very long-distance end of the market, the submarine systems submarket may actually grow this year, due to transoceanic investment from traditional telecom players, as well as companies like Google. And it’s worth mentioning that submarine systems require a whole lot of optical components.

Infonetics Research is on the same page in terms of optical segment inclines and declines. Global sales of packet optical transport systems equipment should continue to grow, which means there will be gradual decreases in SONET/SDH equipment sales, according to Infonetics Research President Michael Howard, who calls the recession’s impact on the global optical network market “minimal.” Consumers and businesses are contending with more bandwidth-intensive applications, and service providers aren’t abandoning their IP transformation projects as much as maybe delaying certain expenditures for a quarter or two, but not cancelling them.

The 2009 outlook for the optical market could be called the best of the worst.