Test Market Goes Metro

Makers of telecom test equipment are locking onto demand in the metro space, according to a recent report from Frost & Sullivan.

Growth in metro networking testers is expected to be "moderate" over the next five years, says Jessy Cavazos, research analyst at the firm, who authored the report. It will nonetheless top 40 percent in that time. The firm estimates it will grow from $565.8 million in 2002 to a forecast $836.4 million by 2009, making it a boon for suppliers who've been desperate to keep business going.

Testers designed for metro networking applications comprise between 40 percent and 50 percent of new revenue for telecom testers in general, Cavazos estimates.

The majority of testers in the segment are used for installation and maintenance (I&M) of metro networks, with research and development applications and manufacturing making up the rest of the market -- a trend that will continue for the foreseeable future, the firm says.

Gearmakers are "highly focused" on putting gigabit Ethernet, next-gen SONET, and CWDM capabilities into their testers, she says. Indeed, the vendors who've managed success in the test space despite the downturn, including the likes of Agilent Technologies Inc. (NYSE: A), Ixia (Nasdaq: XXIA), and Spirent Communications, have made metro functionality a top priority, she maintains.

Support of Ethernet metro technology is especially key. "Ethernet is the biggest trend we see," Cavazos asserts. Vendor support of metro Ethernet could be instrumental in determining the outcome of the ongoing shakeout in the tester market, which has its share of companies facing economic challenges (see Acterna Default Points to Testing Times and Digital Lightwave Avoids Eviction).

— Mary Jander, Senior Editor, Light Reading

BobbyMax 12/4/2012 | 11:35:28 PM
re: Test Market Goes Metro The test tools from about 100 telecom test equipment manufacturers have been tolerable so far. Many equipment manufacturers bought test euipment in large companies, but this trend is decling. The test market vendors are quick to announce their products as soon as new technlogy is introduced. The test vendors have also done brisk business with the RBOCs
Standardsman 12/4/2012 | 11:35:13 PM
re: Test Market Goes Metro
I don't know where Frost and Sullivan are getting these numbers from. This $565m number sounds like hype.

They have said before the total market for GigE testers in 2002 was less than $100m with about 45% from carriers and the rest from equipment manufacturers and private enterprises's. That sounded about right.

What is the make up of the other $400m +? Sonet testers for Installation? I think they are taking revenue from other categories and lumping it in the metro category to 'sex' it up.
materialgirl 12/4/2012 | 11:35:11 PM
re: Test Market Goes Metro Market research numbers are always baloney. You can bet every market is "$1B in five years". However, the direction, which is UP, is quite interesting. Additionally, the need for Ethernet is new under the sun. It speaks of change in the air.
stephenpcooke 12/4/2012 | 11:29:23 PM
re: Test Market Goes Metro Possibly the single largest omission in reports such as these are the contributions of the 'grey' market (ie: equipment sales by companies that are downsizing, etc.). One of the biggest markets to be in in the last couple of years has been the auctioneering market. With the death of multiple startups, particularly those who bought their equipment as opposed to leasing it, and the over-purchasing of the likes of Nortel have left an enormous glut of quality test equipment on the market.

When I was setting up a telecom test lab 2 years ago, I was able to equip it, thanks to various auctions, at less than 15 cents on the dollar. One has to ask where the new customers are coming from...? There is very little new R&D work going on due to concentration on revenue-generating product lines (read: little demand for newer technology testers). Those revenue-generating product lines are mostly mature technologies (eg: SONET/SDH, EtherNet, etc.) for which there have been many failed companies who have been selling their test gear. Until this glut disappears it is difficult to see anything clearly in this space.

How many CFO's do you know who would sign off on the purchase of a new $250k tester from the manufacturer (OK, it comes with a warranty) when you can buy 4 of them at an auction for the same total?
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