2Q15 ON market rebounds on strong backbone, subsea and DCI growth
Sep 7, 2015
Global optical networking (ON) spending grew sequentially for the third consecutive quarter in 2Q15, finds global analyst firm Ovum. Quarterly results of US$3.9bn for 2Q15 were 25% higher than they were in 1Q15 and 2.3% higher than the year-ago quarter.
Annualized global optical networking (ON) spending grew to US$14.2bn. Strong growth in backbone WDM/CPO-T and SLTE drove share higher for Alcatel-Lucent, Ciena, Fiberhome and Infinera. Backbone spending was up 32% sequentially and 11% versus the year ago quarter while spending on SLTE (submarine line termination equipment) was the highest in 2.5 years. The market showed strong sequential growth in all regions and momentum in EMEA continues despite an unfavourable exchange rate with the Euro versus the US dollar.
In a new market share analysis* , the global industry analysts reveals that ON spending grew strongly in 2Q15 despite a 5% reduction in the global telecom capex spend. Ovum attributes this anomaly to the strong growth in 100G and the emergence of ICPs as a new buyer segment for DCI. The ON market is being buoyed by increasing shipments of 100G and above particularly to Internet content providers (ICPs) for data center interconnect (DCI) which climbed to US$4.6bn in the rolling 4-quarter period.
“Spending on high-capacity transmission is having a material effect on the market, particularly in North America where many of the ICPs are deploying 100G and above to connect large hyper-scale data centers,” according to Ron Kline, principal analyst at Ovum. “Annualized spending on high-speed optics surpassed US$5.5bn in the quarter, 15% growth over 2Q14 and total bandwidth shipped during the period topped 72.6 Exabytes, 25% higher than the year-ago quarter.”
“2Q15 global ON revenue results are consistent with our most recent annual forecast published in January 2015predicting the market will finish 2015 at US$14.5 billion up 4.2%. However, we remain cautiously optimistic that recent turmoil in the financial markets of China will not trigger a wider-scale pullback in optical spending through the remainder of the year,” concluded Kline.
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