Optical networking equipment vendors are riding high. In a report out this week, Ovum RHK published preliminary analysis of second quarter 2007 results for the industry, and said globally revenues rose 14 percent (to $3.5 billion) over previous quarter in 2007, and 20 percent versus second quarter 2006.

 

These results, Ovum said, indicate that 2Q07 was the best quarter for the optical networking market in six years.

 

Spending on metro wavelength-division multiplexing (WDM) equipment was up 51 percent over the four-quarter period ending 2Q07.

 

“Results were positive across all regions and all next-generation product segments; thanks to AT&T (News - Alert), spending was strong even in legacy long-haul DWDM,” Ovum analyst Dana Cooperson said in a statement.

 

Cooperson added: “Continued slow spending in the Japanese market provided the only real disappointment, with local vendors, most notably Fujitsu, bearing the brunt of the stagnation there.”

 

The report also indicated that annualized spending on optical networking equipment reached $13.2 billion during 2Q07. Vendors in the top ten places based on posted results for the quarter included Alcatel-Lucent, Ciena, Huawei (News - Alert), NEC and Tellabs.

 

Cooperson credited increased exposure, seasonal spending rebound in China, growth of North American metro and backbone deployments and strong spending in the EMEA region as causes for these companies’ success.

 

Ovum noted in its report that the undersea market for optical networking equipment showed signs of recovery during 2Q07. Annualized terrestrial line termination equipment spending increased 21 percent over first quarter 2007, topping $300 million.

 

The dynamics of this market continue to change, Ovum said, due to the creation of “megavendors” like Ericsson (News - Alert), Nokia Siemens and Alcatel-Lucent. Competitors of the big boys are attempting to stay in the market with specialized solutions rather than butt heads against the large vendors’ end-to-end value propositions for services and equipment.

 

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