Tougher market conditions in 2001 will force a growing number of startups to abandon hopes of staging IPOs and look to be acquired instead, according to Scott Clavenna, president of PointEast Research LLC and director of research at Light Reading.

One of the main reasons for this is that carriers are becoming wary of buying equipment from startups, says Clavenna, in a Light Reading report on the Top 10 Trends of 2001, published today.

Clavenna says that a shakeout is inevitable this year, because there are so many startups and because it’s gotten much tougher for service providers to raise money to continue their expansion plans.

However, Clavenna doubts the shakeout will be particularly severe. “A few high profile bankruptcies of CLECs [competitive local exchange carriers] have got folk over-anxious,” he says. The market for optical networking equipment will remain “quite strong” for another five years, he adds.

“The emphasis is shifting from grabbing market share to making a proper return on investment,” says Clavenna. This is reflected in the Top 10 Trends report, which identifies the technologies that promise to dominate 2001. The report also identifies the companies to watch in each field.

-- Peter Heywood, international editor, Light Reading http://www.lightreading.com