DWDM Market to Triple

The world market for DWDM systems will rocket to $17.90 billion in 2004, from $5.57 billion this year, according to Pioneer Consulting http://www.pioneerconsulting.com

Long haul DWDM will still account for the lion’s share of sales - $15.85 billion –in 2004. But Metro DWDM sales will top $2 billion by then, having doubled this year and next (see chart).

DWDM demand is fueled by explosive growth of traffic on Internet backbones, which will outstrip supply for the foreseeable future, according to Scott Clavenna, principal analyst at Pioneer. This is because:

• broadband access deployment is accelerating
• new entrants in the wholesale bandwidth market are rushing to build backbones
• e-commerce is attracting unforeseen consumer interest in the Internet

North America represented a massive 74 percent of the world DWDM market last year (see table). That’s because:

• other countries haven’t suffered the same fiber exhaust problems as the U.S
• distances are generally longer in the U.S., which boosts requirements for expensive optical regeneration equipment.
• competition pressures have forced US carriers to look harder for ways to cut costs.

Sales of DWDM equipment in the rest of the world will pick up by 2004, but North America. will account for more than half of the world market. That’s partly because fiber will continue to be in short supply in the U.S., and partly because there’ll be more demand for optical circuits direct to customers there.