Cignal AI 2018 Q2 reports cites sustained spend growth in EMEA region

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In Cignal AI’s latest optical hardware report, looking at the second quarter of 2018, the research firm identified sustained spending growth in the EMEA region despite the absence of major supplier ZTE.

The company’s Optical Hardware Report is issued every quarter offering analysis of optical equipment revenue across all regions and equipment types. The report examines revenue for metro WDM, long-haul WDM and submarine (SLTE) equipment in six global regions and includes detailed port shipments by speed. Vendors include Adtran, ADVA, Ciena, Cisco, Coriant, Cyan, ECI, Ekinops, Fiberhome, Fujitsu, Huawei, Infinera, Juniper Networks, Mitsubishi Electric, MRV, NEC, Nokia, Padtec, TE Conn, Transmode, Xtera and ZTE.

In the Q2 2018 report, optical hardware spending was cited as rising six per year-on-year, but the company noted a soft market persisting in North America for the period, where slow spending by incumbent operators had not been offset by the spending of cloud operators, which remains flat.

Amongst some of the other key findings, the report detailed a rise in EMEA spending, with almost all vendors reporting growth in the region. Cignal AI says that vendors continue to be optimistic on large incumbent operator spending. Ciena reached record high revenue in EMEA during the quarter, while Nokia also notably increased revenue, excluding SLTE equipment.

In addition, however, there was no return to growth for North America, as optical hardware spending continued its decline. Weakness is deeply concentrated among the smaller vendors, who experienced double-digit YoY revenue declines, while the largest vendors all grew revenue.

With the absence of ZTE in the market this quarter, said the company, China saw a sharp revenue decline. Yet Huawei reported all-time record high revenue in China. Carriers did not curb market activity until ZTE’s return contrary to our assumptions. Japanese spending, however, was very strong. Ciena and Nokia both performed well in Japan and offset revenue declines experienced by traditional Japanese equipment vendors Fujitsu and NEC. Excluding ZTE, revenue in RoAPAC grew, though both Ciena and Nokia saw their revenue decline year-on-year for the first time in two years. Huawei reported strong growth in the market.

Commenting on the latest figures, Andrew Schmitt, lead analyst for Cignal AI said: ‘Spending on optical hardware in North America declined again in 2Q18, but the trend of big vendors performing relatively better continued. During the past two years, the top three optical equipment vendors in the region consolidated 10 per cent of the market at the expense of smaller competitors. It’s becoming a much tougher fight for smaller optical equipment vendors in North America.’

The Optical Hardware Report for Q2 of 2018 follows the publication in May of the report covering the first quarter of 2018.  May’s report detailed, amongst its findings, an increase in optical hardware spend in Europe and the Asia Pacific, but down in North America (see Optical hardware spend up in Europe, Asia Pacific, down in North America, says Cignal AI).

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