Our current forecast, published in the December 2008 edition of the Heavy Reading Packet-Enabled Optical Networking Quarterly Market Tracker, puts the emerging segment at $35 million for 2008. With the books closed on 2008, we are currently gathering the final P-OTS numbers for year, but early indications are that this published figure is close to the mark.
The emergence in 2008 of solid products and real revenue are a good start. But more important is what's in store for the P-OTS segment in 2009 and beyond? We believe that P-OTS will do well and grow at the expense of the market they are designed to replace: the multi-billion dollar and mature multiservice Sonet/SDH segment, a.k.a. multiservice provisioning platforms (MSPPs). Prior to this economic crisis, we had already anticipated that the multiservice Sonet/SDH segment was getting ready for a decline. We now believe that the decline will accelerate.
P-OTS, on the other hand, has two points in its favor:
- First, the market is so tiny currently that cuts really have no impact on capex budgets at all. We believe that the market's small size gives it a bit of protection from across-the-board capex-cutting mandates. (It's still flying under the radar.)
- Second, and more importantly, P-OTSs are specifically built to support operators' growth services, including broadband fixed and mobile data, Ethernet services, and IPTV. As these growth initiatives remain in place, P-OTS will remain a significant part of the picture.
The counter argument to the points made above is that new projects are always the first to get scrapped in a recession, as operators retreat to their comfort zones (legacy services, infrastructure, and methods). While this may have been true of the 2001 telecom recession, we don't think this argument will hold this time around – at least, not in optical networking. The big difference between now and then is seven years of rapid packet traffic growth and slowing TDM revenues.
In any case, packet applications and P-OTS are inextricably linked. We think that's good news in 2009 for the vendors that have made P-OTS investments.
— Sterling Perrin, Senior Analyst, Heavy Reading
For more information about Heavy Reading's Packet-Enabled Optical Networking Quarterly Market Tracker, or for a FREE PREVIEW of this exciting new product, please contact:
- Lee Salem
Sales Director – Custom Research, Heavy Reading