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DWDM

Dell'Oro: Transport Market Down 23%

Spending on DWDM and Sonet/SDH equipment isn’t going to pick up at all until 2003 and won’t return to the levels experienced last year for the foreseeable future, according to a market forecast published yesterday by the Dell'Oro Group.

The forecast, for the worldwide optical transport market, says overall revenues for this type of equipment will total $17.7 billion this year, down roughly 23 percent from last year's total of $22.9 billion.

Additionally, the firm doesn't predict the market will start growing again until 2003. And even then, it forecasts only a small increase of about 3 percent from the preceding year.

The figures are no surprise. Late in May, Dell’Oro predicted that the dwindling fortunes of key players in the optical networking market, such as Nortel Networks Corp. (NYSE/Toronto: NT), would have a negative impact on overall revenues this year (see Nortel Drags Down Market).

It’s a trend that won’t be easy to budge. According to Shin Umeda, principal analyst at Dell’Oro, the lack of spending by service providers represents more than a mere cutback. It’s the result of many carriers turning a corner in network development.

”Many emerging [service providers] embarked on constructing new large North American and global fiber optic networks,” the report states. “In late 2000, many of these [service providers] completed the main construction phase of their optical networks and began transitioning their purchasing patterns from high volume infrastructure build-outs to more modest incremental bandwidth acquisitions.”

Not to mention the carriers who’ve gone bust during the recent downturn.

Dell’Oro’s figures seem to tally with other firms’ findings about the displacement of Sonet/SDH with DWDM gear. Another research firm, Frost & Sullivan, has reported that by next year, traditional Sonet/SDH gear will start to decline in proportion to a burgeoning market for next-generation equipment, including DWDM gear with Sonet interfaces (see Report: Next-Gen Gear Replacing Sonet).

- Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com Want to know more? The big cheeses of the optical networking industry will be discussing this very topic in a session at Opticon 2001, Light Reading’s annual conference, being held in San Jose, California, August 13-16. Check it out at Opticon2001.

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whose 12/4/2012 | 8:00:23 PM
re: Dell'Oro: Transport Market Down 23% Last year Dell 'Oro reported double digit growth in Optical over the same horizon.
gardner 12/4/2012 | 8:00:23 PM
re: Dell'Oro: Transport Market Down 23% Last year Dell 'Oro reported double digit growth in Optical over the same horizon.

Duh! Last year someone at Dell'Oro was long on Optical stock, this year they are short. ;-) Sheeesh get with the program. ;-) Yeah, I'm cynical. In the immortal words of Molly Ivins "My momma may have raised a mean child but she raised no fools." ;-)
lightjudge 12/4/2012 | 8:00:22 PM
re: Dell'Oro: Transport Market Down 23% Most of the forecast is looking at back mirror view. They are changing their forecast dramatically from about half year ago. If they can not forecast what can happy in half year, how can you trust their forecast in long run like 2 to 5 years.
-lightjudge
lightjudge 12/4/2012 | 8:00:22 PM
re: Dell'Oro: Transport Market Down 23% Most of the forecast is looking at back mirror view. They are changing their forecast dramatically from about half year ago. If they can not forecast what can happy in half year, how can you trust their forecast in long run like 2 to 5 years.
-lightjudge
gea 12/4/2012 | 8:00:21 PM
re: Dell'Oro: Transport Market Down 23% Lightreading's desciption of the Dell'Oro report states...

"many of these [service providers] completed the main construction phase of their optical networks and began transitioning their purchasing patterns from high volume infrastructure build-outs to more modest incremental bandwidth acquisitions"

Am I wrong, or is this the kind of thing that is in theory predictable? If so, why didn't Dell'oro predict this slowdown before it ocurred?

I actually still believe that this long slow stretch is temporary. When it ends, equipment deployment will proceed faster than it did previously, as the fundamentals have not really changed, and we've only gotten better at our ability to eat up bandwidth.

[email protected] 12/4/2012 | 8:00:21 PM
re: Dell'Oro: Transport Market Down 23% These look at least a bit more realistic in light of the economic situation. However, where is this company getting its intel? Are they talking with any carriers?

I spoke with someone who used to work for a major vendor and who was also responsible for giving this company the information on ports. The person admitted that they would overestimate their figures and this firm would take them at face value. (The fact that the company was buying the service from Dell'Oro made it easier for the analyst to swallow). Maybe it is now fashionable to be a pessimist.....

We have to consider that if people were really that good at predicting the future then chances are they would be long retired and fishing.

I guess that once we shoot all the analysts and burn all of the PR people at the stake, we will then all be able to get busy on doing what it takes to have this industry work out.
[email protected] 12/4/2012 | 8:00:20 PM
re: Dell'Oro: Transport Market Down 23% It is actually rather predictable if you know your ass from your elbow when it comes to business. The wild growth projections are usually used for:

1. Making client happy
2. Getting noticed
3. Giving brokers ammo to sell equities
4. Getting PR companies or Marcom people inside the vendors to suck up to them and send them business. (Lord forbid the analysts and PR types would ever try and do something other that sell the rest of the world the Emperor's new clothes).

That's one thing that I have enjoyed about this site is that the management does not suck up to PR people or buy into their BS about their companies or clients.
ownstock 12/4/2012 | 8:00:20 PM
re: Dell'Oro: Transport Market Down 23% No I'm not.

Yes you are, no tags back!

These guys are classic: wrong on the way up and wrong on the way down. Even with the advantage of waiting until the bulk of the moving is made in one direction or the other.

If the analysts in diapers dod not rely on the other kiddies stuff like it was the Word of God, their stuff wouldn't be worth the bits it takes to put the stuff on LR...let alone paper.

Analysts, VCs and Investment Bankers: Like watching an episode of Rug Rats on Saturday morning...only question is:

Who is Chuckie?

-Own
Pat Mudge 12/4/2012 | 8:00:19 PM
re: Dell'Oro: Transport Market Down 23% OWN --

It's interesting that Del'Oro contradicts itself.

>>>>
Additionally, the firm doesn't predict the market will start growing again until 2003. And even then, it forecasts only a small increase of about 3 percent from the preceding year. . . .

DellG«÷OroG«÷s figures seem to tally with other firmsG«÷ findings about the displacement of Sonet/SDH with DWDM gear. Another research firm, Frost & Sullivan, has reported that by next year, traditional Sonet/SDH gear will start to decline in proportion to a burgeoning market for next-generation equipment, including DWDM gear with Sonet interfaces (see Report: Next-Gen Gear Replacing Sonet ).

<<<<<

If you throw Sonet/SDH in with DWDM, the numbers show slowing growth. If you take DWDM out, the numbers are completely different.

Also, if researchers/analysts removed the 2000 bubble and based growth on figures from 1999, again, the picture would look considerably more positive. Do you happen to have world-wide transport figures from 1999? It would be interesting to see what the difference would be without the '00 blip.

Pat
jmd 12/4/2012 | 8:00:19 PM
re: Dell'Oro: Transport Market Down 23% At the very least, the contraction and lack of growth should send the analysts, researchers and brokers packing for other pastures. That leaves us with a $15B row to hoe.
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