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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.

ajo2 12/4/2012 | 7:56:22 PM
re: Dell'Oro: Transport Market Down 23% Come on Light Reading - show us the rest of the data. What did the market do before 2000? Is 2001 forecast to be better or worse than 1999? If you measure from the very top of the bubble, of course it is going to look down. Talk about a micro view of things.
networking_legend 12/4/2012 | 7:59:45 PM
re: Dell'Oro: Transport Market Down 23% "Attila the Hun, Joseph Stalin, Adolf Hitler, Mao Zedong and Bill Clinton all thought like that"

Who ever authored this quote should be commended. After all, how many people can type so well with a straight jacket on :)
LightCycle 12/4/2012 | 7:59:47 PM
re: Dell'Oro: Transport Market Down 23% > ... Fujitsu (who is really screwing the pooch
> in their biggest accounts product and

You said it!

Naturally, the analyst don't pay nearly as much attention to Fujitsu as they do NT, LU.
optical_guy 12/4/2012 | 7:59:47 PM
re: Dell'Oro: Transport Market Down 23% "Attila the Hun, Joseph Stalin, Adolf Hitler, Mao Zedong and Bill Clinton all thought like that.
Anyone who could put any American president in the same list with Attila, Stalin, Hitler and Mao is either ignorant of history, flippant to the point of callousness, or an idiot. "


I agree. I personally would put Bill Clinton in the same list as Marion Barry, Al Sharpton, and actually Richard Nixon. But what the hell do I know.

Ciao'
OG
[email protected] 12/4/2012 | 7:59:58 PM
re: Dell'Oro: Transport Market Down 23% true points....

The bigger you are means the higher the external expectations so in a slowing economy it means that if you sell 5% less than you and the folks around you thought that you would, the result is a major problem. Also, ONI and CIEN do not need to sell as much to look good.

If you sell products that people find to be inadequate, then you have an even bigger situation for the shortfalls start approaching 20% and that is what causes the 25-30% reductions in work force and 6-% drop in share price.
jghutchison 12/4/2012 | 7:59:59 PM
re: Dell'Oro: Transport Market Down 23% It is unfortunate that most journalists, pundits, gurus, and analysts throw SONET/SDH equipment into the same basket with next generation equipment. This is akin to lumping Yugos with Ferraris. Worlds apart.

The legacy equipment market is suffering, as it should, during this period of lower capex spending. However, next generation equipment sales continue to improve, as they should, due to the simple fact that this stuff offers better than a ten fold efficiency improvement in the network. This efficiency translates to lower operating and capital costs.

No wonder companies that offer next generation equipment like Ciena and ONI continue to do well in this environment.

Regards,

Jack Hutchison
optera 12/4/2012 | 8:00:00 PM
re: Dell'Oro: Transport Market Down 23% What you will see happening eventually is that the market is adjusting between (extremely high growth) and (almost no growth) for bandwidth.

In a crowded market, what the end result should bring is a competitive landscape where prices are low and affordable down to the end consumer.

This is all good.
[email protected] 12/4/2012 | 8:00:05 PM
re: Dell'Oro: Transport Market Down 23% http://www.teledotcom.com/arti...


This is an interesting story. I have a few contacts in some SPs who say that they have seen some cutbacks but not as bad as everyone claims. Nortel, Lucent, Fujitsu (who is really screwing the pooch in their biggest accounts product and service wise....I hear that Cisco kicked their ass in 2 RBOC accounts) etc are victims of having produced shitty equipment and are being lead by morons.

CIR just kicked a report that claims that Sprint and Worldcom are not as bad off as everyone else claims: www.cir-inc.com

Perhaps the problems that we are experiencing in this industry are a function of poor technology choices and not the horror that everyone claims...

360 Networks was doomed to fail, Level 3 close to follow and Williams bringing up the rear because they have bad busines models.

Reality check after all?
[email protected] 12/4/2012 | 8:00:07 PM
re: Dell'Oro: Transport Market Down 23% Note to editors:

Please stop writing stories about these people. The reaction on these boards should tell you something about how seriously the market takes them.
Naquada 12/4/2012 | 8:00:07 PM
re: Dell'Oro: Transport Market Down 23% The following article deserves some attention:

NTT launches 100-Mbit/s fiber-optic service
By Yoshiko Hara
EE Times
(07/31/01, 5:55 p.m. EST)



TOKYO GÇö Nippon Telegraph and Telephone Corp. will launch a fiber-optic service in Japan on Wednesday (Aug. 1) capable of supporting 100-Mbit/second transmissions, opening the way for full-scale fiber to the home.

The service will depend on the readiness of Internet service providers to connect to NTT's fiber-optic network, which will be offered at a basic rate of $73 per month.

NTT's pricing is almost a quarter as much as it had originally planned to charge for the service, but the company lowered its rates after a small company named Usen Corp. initiated a 100-Mbit/s fiber-optic service in a limited area of Tokyo this past March. Known as a cable music distributor, Usen shocked the Japanese communications industry by beating NTT to the punch with a 100-Mbit/s service priced at $40 per month.

Usen has already signed up 3,400 subscribers and is now expanding its fiber-optic service area to include greater metropolitan Tokyo and other cities with populations of 1 million or more, which it plans to support starting in October.

Usen acts as the information provider for its 100-Mbit service, and does not allow other ISPs to connect to its network.

In a trial service that began last December, NTT offered a best-case service of 10 Mbits/s and set a monthly rate of about $258 at that time.

"Usen's business surely had some impact on NTT's [pricing] strategy," said Atsuo Takahashi, senior analyst at ABN Amro Securities (Japan) Ltd. "But at present Usen is skimming the cream off. Sooner or later, the company will reach the point where it cannot keep the low rate. NTT should not take Usen's service a big threat."

What can you get?


To demonstrate the capabilities of a broadband network, NTT recently launched a joint experiment with Dai Nippon Printing and Sharp Corp. The program is to last six months. .

"This experiment targets market creation. We are going to show images and videos that are not available through current networks and that will make consumers realize [the service is] worth paying for," said Shigehiko Suzuki, senior vice president of NTT.

A Japanese government project, dubbed e-Japan, intends to connect 10 million households to 100-Mbit/s networks and 30 million households to 10-Mbit/s networks by 2005. That level of penetration would involve more than 90 percent of Japanese households. "To realize 10 million households connected to broadband networks, it is really necessary to involve consumers widely," Suzuki said. "To demonstrate what the broadband networks can do will practically expand the market."

In the three-company experiment, DNP will serve as contents provider, Sharp will work on in-home terminals, and NTT will provide the network infrastructure.


duffeck 12/4/2012 | 8:00:08 PM
re: Dell'Oro: Transport Market Down 23% the Worldwide Optical Transport Market will grow by 49% per year reaching $57.3 Billion in 2005 up from $23.5 Billion in 2000 according to the same Shin Umeda.

http://www.delloro.com/PRESS/P...

Oh yeah that was way back in January.

Give me a break!

duff
gardner 12/4/2012 | 8:00:10 PM
re: Dell'Oro: Transport Market Down 23% Attila the Hun, Joseph Stalin, Adolf Hitler, Mao Zedong and Bill Clinton all thought like that.

Anyone who could put any American president in the same list with Attila, Stalin, Hitler and Mao is either ignorant of history, flippant to the point of callousness, or an idiot. Which is it flanker?
cfaller 12/4/2012 | 8:00:11 PM
re: Dell'Oro: Transport Market Down 23% Pat Mudge wrote:

"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."

FYI, A couple months ago, Fat Pipe (www.fatpipeonline) looked back at forecasts from 1998-1999, before the dot-com hype. The result? The industry is about 10% above the predictions for 2001. Not bad, huh?

And no, I don't work for Fat Pipe Online, I just really pay attention to whatever Gary Kim has to say.
ownstock 12/4/2012 | 8:00:15 PM
re: Dell'Oro: Transport Market Down 23% Attila the Hun, Joseph Stalin, Adolf Hitler, Mao Zedong and Bill Clinton all thought like that.

What?!!? Go smoke a fatty, dude! All those guys survived on PR people...and putting an American President (even BC) in that that league is a way, way over the top.

Did you take your pills today? Has that Richard Nixon voice in your head come back? Or is it the satellite mind control bug the CIA planted?

:-)

-Own
[email protected] 12/4/2012 | 8:00:17 PM
re: Dell'Oro: Transport Market Down 23% Lighten up for pete's sake....



Noticed that you are still ragging on Bill. He's gone....it's okay to find someone else on the left to target.
flanker 12/4/2012 | 8:00:17 PM
re: Dell'Oro: Transport Market Down 23% "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."

Funny.

Attila the Hun, Joseph Stalin, Adolf Hitler, Mao Zedong and Bill Clinton all thought like that.
optical_survivor 12/4/2012 | 8:00:18 PM
re: Dell'Oro: Transport Market Down 23% Does anyone know what is the range for 2.5G and 10G transport services per month??? For instance, what would UUNET or any other service provider pay for the 2.5G and 10G per month to the transport bandwidth provider??? How about tariff for protected vs. unprotected connectons??? Can one go to Enron and get 2.5G or 10G ??? Is Enron selling this bandwidth much cheaper than other transport bandwidth providers?

Thanks in advance
Optical Survivor
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. . . .

DellGÇÖOroGÇÖs figures seem to tally with other firmsGÇÖ 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.
[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
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.
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
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." ;-)
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