Optical networking market set for modest growth

The worldwide optical transmission systems market will begin to recover from the 10% decline in revenues in 2001, predicts Gartner Group.

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By  Zoe Moleshead Published  February 17, 2002

The networking market may have struggled last year, but analysts believe the market has reached rock bottom and are anticipating flat growth this year. According to Gartner Group, the worldwide optical transmission systems market will begin to recover from the 10% decline in 2001, and will record modest growth in 2002.

The market revenue for 2002 is expected to total $32.6 billion, an increase from the $30.3 billion recorded in 2001, but still down on the 2000 total of $33.8 billion. According to Gartner Group, the optical transmission market will not exceed 2000 levels until 2003 when it will top $36 billion.

"While the market in 2003 will be similar in size to the market in 2000, its nature will have changed significantly," said Peter Kjeldsen, senior analyst with Gartner Dataquest's EMEA Telecommunications group.

"Consolidation in the market will have changed the number of vendors and operators, and their relative strengths are likely to have changed as well. The drivers for this change include a continued increase in the demand for bandwidth, introduction of an optical layer to handle DWDM channels intelligently and a continued migration of the fibre optic technology towards the edge of the network — most noticeably in metro networks," he added.

Gartner research also revealed that SDH/SONET technology will dominate the market, followed by dense wavelength division multiplexing (DWDM).

The Asia/Pacific market is also proving a bright spot in the optical market. While the North American and Western European markets both declined by19.6% and 2.3% respectively in 2001, the Asia/Pacific market grew by 18.8%, fuelled by growth of 23.7% in the Chinese market.

"The Chinese market is the obvious attraction right now," said Kjedsen. "But because it is so obvious an opportunity, many players will try to address this market, so the competition will heat up."

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