There is no recession in carrier networking equipment, at least not yet, according to equipment sales trends revealed by Infonetics Research (News - Alert), Inc.’s most recent reports. All three major carrier equipment categories studied by the market research firm — carrier VoIP and IMS, routers and switches, and optical networking — showed strong gains in 2007 over 2006.

 

The figures show a continuing strong trend toward basic IP networking, at all levels from last-mile connectivity to long-haul transport, and suggest that the trend will continue at the current pace, possibly even accelerating, over the next five years.

 

The other trend evident in the figures is that telecom providers worldwide are being driven by the need for speed. Not only are both consumers and businesses using the Internet more, they are demanding higher speeds for high-bandwidth content, such as streaming video.

 

In response, basic backbone network equipment is expected to move into the 100 gigabit-per-second (Gbps) range over the next five years, says Infonetics, while high-capacity routers and Ethernet switches will become commonplace in data centers.

 

2007 was “a good year” for carrier VoIP and IMS, according to Infonetics, which reported a 19 percent increase overall, bringing the size of the market up to $3.9 billion. IMS core equipment nearly doubled although those in the IMS arena concede that the actual numbers are very low.

 

Nevertheless, the combined VoIP and IMS market is predicted to reach $8.4 billion by 2011, for a compound annual growth rate of 29 percent on average for the next four years.

 

The strong migration to VoIP, however, does not mean demand will fade soon for equipment, such as gateways, that links VoIP and the circuit-switched networks, says Stephane Teral, principal analyst for VoIP and IMS, Infonetics Research. “I don’t see the VoIP equipment market cooling off,” says Teral. “It may seem that way for media gateways because it’s a mature market; even softswitches. But the fact is you need them to bridge the new IP network to the PSTN.”

 

Also, Teral says, the market for these transitional products is being driven by the expansion of VoIP generally. “Large incumbents such as BT (News - Alert) [Group], France Télécom [Orange], KPN, etc., are migrating their wireline subscribers to IP in general, which means VoIP for telephone service. Take Softbank, the world’s largest VoIP service provider by subscribers. They are now offering mobile services through the acquisition of Vodafone Japan.

 

Mobile networks figure significantly in the growth of VoIP equipment. “In fact, softswitches are now more and more deployed in mobile networks in lieu of mobile switching centers (MSCs), displacing TDM MSCs,” Teral points out.

 

One exception is dedicated VoIP equipment. “Standalone VoIP does not add that much value. That’s why it’s so difficult for Vonage (News - Alert),” Teral says. “Consequently, we can argue that dedicated VoIP equipment is cooling off because you need equipment that does more than VoIP alone.”

 

IMS equipment also is growing slowly, in part, Teral says, because there is still a great need to interconnect to the traditional PSTN. “That’s why it will take a while to migrate to the IMS architecture. It is replicating the PSTN, and that means complexity.”

 

If the VoIP-specific equipment market is seeing a healthy year, it is being matched by product back in the network that enable delivery of those service. The market for service-provider routers and switches was $11.2 billion in 2007, an increase of 16 percent from 2006. In fact, the 2007 figure was an all-time high for routers and switches, says Infonetics.

 

For optical equipment, the total market was $13.9 billion in 2007, up 19 percent from the year before.

 

It is in these categories where the push for more Internet and more speed is felt most keenly. “Traffic jams are being caused by user applications, such as music and video downloading, YouTube (News - Alert) clips — even corporations are using YouTube for marketing videos — online news and social networks, such as MySpace. As an example, I recently watched video feeds of the Amgen Tour of California bicycle race for a few hours at a time, something not possible a year ago,” says Michael Howard (News - Alert), principal analyst and co-founder of Infonetics.

 

Once again, IP networking is the driver of growth. For example, carrier Ethernet, once just a blip in carrier equipment figures, is now growing 36 percent yearly, the fastest growing segment in router and switch markets. Meanwhile, older technologies, notably SONET/SDH, showed modest growth at 9 percent, while the high-speed (somewhat) new kid on the block, wave-division multiplexing (WDM) took off at a 39 percent growth rate for 2007 over 2006.

 

In both routers and switches, and optical equipment the speed standard is moving steadily toward 40 Gbps. But that torrid pace is expected to start to take a back seat to 100 Gbps technologies within five years.

-----

  

 

 

 

 

 

 

 

 

 

---

---

Subscribe FREE to all of TMC's monthly magazines. Click here now.

---