Optical hardware spend up in Europe, Asia Pacific, down in North America, says Cignal AI

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Cignal AI has published its Optical Hardware Report for the first quarter of 2018. Key findings include a noted growth in optical hardware sales in the Asia Pacific region – fuelled by additional increases in spending outside of China – and sales growth in the EMEA region also year-on-year. The report did highlight a spend decline in the North American market, which it said proved weaker than expected.

The quarterly Optical Hardware Report includes market share and forecasts for optical transport hardware used in optical networks worldwide. Vendors in the report 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. It examines optical equipment revenue across all regions and equipment types.

Other key findings in the report included flat optical hardware spending in China year-over-year, and the company estimates that ZTE had experienced a soft quarter even before the impact of the export ban. Outside of China, the RoAPAC continued to grow, with Huawei, Nokia, and Coriant as primary beneficiaries.

North American spending declined by nearly double digits year-on-year in the first quarter and remains weak, according to the report. Cignal AI said it expected the region to rebound in 2018 with the return of stabilised pricing. But aggressive pricing continues and may impact total spending levels for the entire year. However, Infinera was cited as a bright spot in the North American market as sales of its new ICE3-based products helped lead a revenue turnaround.

There is optimism in EMEA, with vendors optimistic about ongoing spending trends in the region, particularly among the large incumbents. This bodes well for Nokia and Ciena, said Cignal AI, as the two companies well-positioned to take advantage of new market opportunities.

Discussing the report, Andrew Schmitt, lead analyst for Cignal AI, said: ‘The massive spending in China during 2017 has slackened during 1Q18, resulting in flat year-over-year growth. A precise determination of results for the region is complicated by the ongoing ZTE export ban and ZTE’s communication blackout. Meanwhile, North America continues to be weaker than expected in an aggressive pricing environment.’

The Optical Hardware Report for Q1 of 2018 follows the publication in February of the report covering the last quarter of 2017.  February’s report detailed, amongst its findings, a growth in spend in the Asia and the EMEA region as larger equipment vendors gained traction. North American optical capex, again, was said to be weaker than expected because of lower spending by incumbent operators (see Cignal AI Q4 2017 Optical Hardware Report reveals increased spend in APAC and EMEA).

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