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Infonetics names optical hardware winners and losers

Despite the fact that 2014 was a diffcult year for optical systems vendors in general, with the global optical hardware market down one per cent overall, Ciena, Infinera and ZTE still managed to post impressive revenue gains, according to the latest report from Infonetics Research, now part of IHS.

Infinera, which Infonetics calls ‘the fastest-growing optical company in the West’ (North America and EMEA combined), was the big success story for 2014, with 23 per cent revenue growth from the previous year.

Meanwhile, Ciena boosted sales by 12 per cent to become the second largest optical vendor in the world in 4Q14, just edging out Alcatel-Lucent.

Infonetics attributes the changing fortunes of the various vendors to, among other things, exposure to traditional telecoms carriers, who are experiencing declining revenues (see Telecom revenue growth stalls but datacom accelerates).

"The North American optical market diverged sharply in 2014, with strong results from Adva, Infinera and Ciena balanced by major weakness at traditional vendors like Alcatel-Lucent, Fujitsu and Coriant," said Andrew Schmitt, principal analyst for carrier transport networking at Infonetics Research. "The pattern here could not be clearer: companies whose fortunes are tied to traditional carriers are underperforming. Yet the press and investor echo chamber's fascination with AT&T and Verizon spending inexplicably remains."

Globally, the optical systems market has been tough over the past year. Although global spending on WDM equipment grew 6 per cent in 2014, to reach $10 billion, this was outweighed by the continuing decline in sales of SONET/SDH gear, which were down 25 per cent during the year.

Combined, the WDM and SONET/SDH optical network equipment market totalled $3.2 billion in 4Q14, up 7 per cent sequentially, and up 3 per cent from the year-ago quarter. For the full year, however, the overall optical network hardware market ended down 1 per cent in 2014 over 2013.

Schmitt points out that, after a prolonged economic downturn, the forecast is a little brighter in Europe. The end-of-year capex surge is still in fashion in EMEA (Europe, Middle East, Africa), where optical spending surged nearly 50 per cent from the previous quarter.

"One important note on the EMEA region: when measured in euros, fourth quarter WDM optical spending surged 14 per cent from the year prior. This has no precedent in the past five years," Schmitt noted.

The data is from Infonetics' early edition Optical Network Hardware report, which contains vendor market share and preliminary analysis for the global optical equipment market for the fourth quarter of 2014 (4Q14) and full-year 2014.

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