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DWDM

Huawei Gains Optical Ground in North America

Huawei Technologies Co. Ltd. has cracked the North American optical transport market and could be poised to attract business in larger and larger carriers, according to a new Heavy Reading report.

Huawei has had its share of wins in developing countries but "has been a non-factor in North America to date," analyst Sterling Perrin writes in the report, "Optical Networking for Tier 2/3 Operators in North America."

That status has changed in the past two years, though. Thanks in particular to long-haul DWDM work, Huawei has crept up to become the No. 7 supplier of optical gear to the Tier 2 and 3 North American camp.

Competitors tend to dismiss Huawei's North American prospects, but Perrin believes the company's standing is no fluke.

"Once the door is opened (and it has), it is not difficult to imagine Huawei working its way into bigger networks over time," he writes.

"Over time" could be a shorter period than some think. Infinera Corp. (Nasdaq: INFN), which didn't have a product on the market five years ago, ran away with nearly 60 percent of the Tier 2/3 long-haul DWDM business in North America in the first half of this year, Perrin writes.

The report summarizes market-share figures and profiles three major operators in the North American Tier 2/3 category: AboveNet Inc. (NYSE: ABVT), Mid-Atlantic Broadband Cooperative , and SureWest Communications (Nasdaq: SURW). It also includes profiles of 10 optical vendors.

— Craig Matsumoto, West Coast Editor, Light Reading

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Pete Baldwin 12/5/2012 | 3:25:57 PM
re: Huawei Gains Optical Ground in North America So, you've got both Infinera and Huawei trying to be upstarts that break into the Tier 1 North American market. Incumbents like Ciena are already there, by definition. Who wins out?
ninjaturtle 12/5/2012 | 3:25:56 PM
re: Huawei Gains Optical Ground in North America I would like to know who is #2 and how large a lead INFN has over #2. Just didn't want to fork over 4 grand to find out. Seventh in Tier 2/3 is still a long way out. But as seven said we will have to see. It's a big market and only getting bigger. Both should do well as long as value and technology exist.
paolo.franzoi 12/5/2012 | 3:25:56 PM
re: Huawei Gains Optical Ground in North America
Well, it is really simple.

Is there a opening?

If so, can one of the new vendors show up with either unique functionality or a much lower price for the same functionality?

I don't see any of these being true at this exact moment. So, I don't see an opportunity to break in. Huawei seems more likely than Infinera in any case. As we see consolidation in the T1 carrier companies, they tend to buy from larger sellers. Huawei seems more capable of selling products at a lower price and is significantly larger.

But we shall see.

seven
Mostly Harmless 12/5/2012 | 3:25:55 PM
re: Huawei Gains Optical Ground in North America Really? This must be a new definition of "gaining ground" that I hadn't previously encountered.

I will not reveal the actual numbers because this is part of the valuye of this report, but Table 4.1 on Page 21 of this report shows that Huawei ranks on #7 in revenue, and has actually LOST about 2% of market share between 2007 and 1H2008. 2% is a pretty big drop when you're only at 6.2%. And you have to think they'll sell less in 2H2008 given the current financial situation because smaller players will lose revenue first.

So, call me a bluff old traditionalist, but I think a small accurate headline would be:

"Huawei: Small, and Getting Smaller".

It would have been more accurate to call out ECI and Tellabs' success in growing their market shares over the same period as the headline.
rahat.hussain 12/5/2012 | 3:25:55 PM
re: Huawei Gains Optical Ground in North America oops, sorry i should have referred to ninja as he/she.

odo <-- wondering why in her head, turtle = masculine.
rahat.hussain 12/5/2012 | 3:25:55 PM
re: Huawei Gains Optical Ground in North America Guys,

As they say in the marketing world, this is just a teaser for a HeavyReading report, published on its sister site, LightReading.

Everybody's looking for an angle to generate revenues - HR is no different. Let's try the Tier-2 angle and get ninja to fork over $4K, they said. Ninja's way too smart for that, he wants the answers here on Article Talk! ;-)

odo
Pete Baldwin 12/5/2012 | 3:25:54 PM
re: Huawei Gains Optical Ground in North America Touche. I was thinking more of the 2007/2008 levels versus the presumed zero percent Huawei had in 2006 -- not literally zero, but that was the way competitors often treated it.
HomerJ 12/5/2012 | 3:25:53 PM
re: Huawei Gains Optical Ground in North America Indeed. Like their toys, yogurt, human rights, and female gymnasts, that china huawei gear is bound to be tainted somehow.
Sterling Perrin 12/5/2012 | 3:25:53 PM
re: Huawei Gains Optical Ground in North America MH, I understand your point, but I think the title here reflects the findings of the report. I think Huawei has seeded the NA market nicely, and can only grow off of its small starting base. The surprise - to me and others I think - is that they had measurable share in NA at all. They have built this base very quietly. Interestingly, their customers have also been quiet about buying Huawei.

Sterling
paolo.franzoi 12/5/2012 | 3:25:53 PM
re: Huawei Gains Optical Ground in North America
malibu,

As long as you never buy any Chinese good (like say ever shop at Walmart, Kmart, Target, Costco, etc.), you can certainly criticize companies for buying Chinese goods.

Given that Walmart is the worlds largest retailer, don't you think it is a bit hypocritical to put the burden on the telcos?

seven
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