CESR Sales Hit All-Time High
Heavy Reading research analyst and resident Ethernet expert Stan Hubbard said sales of CESR equipment reached $468 million in the quarter. That represented a 15 percent increase from the previous quarter and a 36 percent increase over last year's second quarter.
One growth driver was the ongoing transition from separate Sonet/SDH, ATM, and IP networks to converged Ethernet networks that support numerous services. Other factors included network upgrades from traditional Ethernet to higher-performance CESR platforms; increasing usage of CESR products for mobile backhaul; and new builds related to the deployment of triple-play and VOD services.
That last category was particularly strong. Triple-play and VOD deployments accounted for about 59 percent of CESR sales at Alcatel-Lucent (NYSE: ALU), and close to half of Cisco Systems Inc. (Nasdaq: CSCO)'s CESR business, in the quarter.
The top four CESR vendors each posted double-digit revenue growth in the quarter, with Alcatel-Lucent, Huawei Technologies Co. Ltd. , and Nortel Networks Ltd. all growing faster than the market.
In particular, Huawei, third-largest CESR vendor behind Cisco and Alcatel-Lucent, posted revenue growth of more than 50 percent from the previous quarter. That's partly due to seasonal weakness in the first quarter, but Hubbard also notes that Huawei "is winning CESR business outside of China and now has several products available in its next-generation CX portfolio."
Alcatel-Lucent's CESR business grew 22 percent sequentially, driven by "record CESR and Ethernet Service Edge (ESE) platform sales, with strong performances across all regions," Hubbard writes.
Nortel's sales were up 19 percent from the first quarter, due to interest in the company's Provider Backbone Transport (PBT) products. That technology and Provider Backbone Bridging (PBB) are "popping up in more RFPs/RFIs, and we understand multiple operators beyond those announced by Nortel are exploring hybrid network solutions."
Cisco maintained dominant market share, of course, with sales growing in the low double digits from the previous quarter. Cisco hasn't embraced PBT yet but is certainly tracking the technology. Hubbard writes that "the company's work on PBB is just part of an effort to broaden its set of solutions. This will put Cisco in a good position to support hybrid MPLS/PBB networks if its customers are looking for that flexibility."
Hubbard thinks the global CESR market should remain strong, growing at a compound annual growth rate (CAGR) of about 25 percent through 2010, when sales are expected to reach $3.6 billion.
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— Ryan Lawler, Reporter, Light Reading