Cignal AI has released its Optical Hardware Report for the last quarter of 2017. The report detailed, amongst its findings, a growth in spend in the Asia and the EMEA region as larger equipment vendors gained traction. North American optical capex, on the other hand was said to be much weaker than expected because of lower spending by incumbent operators.
Issued each quarter, the report examines optical equipment revenue across all regions and equipment types, including shipment information and guidance from individual equipment companies and forecasts spending trends in each region and for each equipment type. Key findings include a reported surge in Chinese metro WDM and optical spend, despite concerns of market saturation for coherent 100G ports. 2017 marked a transition in spending from long-haul to metro WDM equipment in all regions, but China played a predominant role in all spending. The most recent data from LightCounting also points to China exhibiting a greater impact on the global optical communications industry (see China optics market to double, says LightCounting). Global metro WDM spending grew 11 per cent but only at a more modest three per cent excluding China.
Weaker cloud and colocation optical capex (see Cignal AI: Cloud/colo spending drops unexpectedly in 2017) – combined with brutal 200G pricing, weak deployments by incumbent and wholesale vendors, and a decline in long-haul WDM purchases – resulted in lower overall spending in North America during 2017. In fact, said the report, cloud and colocation was the weakest North American customer market for the year. A general slowdown in spending by both AT&T and Level 3/CenturyLink exacerbated the North American decline.
The EMEA region had significant quarterly growth in optical hardware sales to a wider array of vendors. While Huawei benefited from strong end-of-year purchases in EMEA, Nokia, Ciena, Cisco, and Infinera increased their presence in this market. Outside of vendors that sold into the Chinese market, Nokia and Ciena reported the best performance in the fourth quarter of 2017, and their success was driven by increased quarterly sales for metro WDM as well as submarine (SLTE).
Andrew Schmitt, lead analyst for Cignal AI commented on the report: ‘One of the biggest surprises in 2017 was massive spending growth in China. Despite slumping purchases from component manufacturers, Chinese optical vendors Huawei and ZTE reported record levels of revenue. A strong component sales rebound should be expected if this divergence was a result of excess inventory. Also, the sustained weakness in the North American market should reverse in 2018 as pricing pressure stabilises.’
The Cignal AI Optical Hardware Report includes market share and forecasts for optical transport hardware used in optical networks worldwide. The analysis includes an Excel database and PowerPoint summaries, plus Cignal AI’s real-time news briefs on current market events, Active Insight. The Hardware Report examines revenue for metro WDM, long-haul WDM, and submarine (SLTE) equipment in six global regions and includes detailed port shipments by speed.
