Alcatel drags down first-quarter optical market

The global optical networking hardware market dropped 12% sequentially in the first quarter “as a direct result” of a 43% sequential revenue drop from the market’s leader, Alcatel, according to Infonetics Research.

Sequential shrinkage in the optical hardware market is typical in the first quarter. Alcatel’s revenue in particular, though down significantly from last year’s fourth quarter, was up 10% from a year earlier. The overall market grew 8% in the same period.

Reconfigurable optical add/drop multiplexers (ROADMs) were the only products to see a sequential increase in first-quarter sales, and at 28%, it was a sizable increase at that. ROADMs currently account for about one twelfth the total optical hardware market.

Infonetics expects the optical equipment market to grow 14% between 2005 and 2009, when it will reach $12.3 billion. Based on 27% growth between this year’s first quarter and a year earlier, Infonetics upgraded its forecast for the long-haul wavelength-division multiplexing (WDM) market in particular (nearly a third of the total market), predicting it will reach $2.1 billion by 2009.

“A lot of carriers haven't invested much in long-haul since before the telecom bubble burst,” Infonetics Principal Analyst Michael Howard said in a prepared statement. “Now that their equipment is old and the new equipment is vastly improved, the business case to invest again is compelling. The new long-haul WDM equipment offers more automation using less space and less power. Everything about it is more efficient.”

Quarterly results in the optical sector are often lumpy and inconsistent. For example, while Alcatel dragged the market down in the first quarter, it drove a 10% sequential increase during the second quarter of 2005, Infonetics reported.

Meanwhile, Adva Optical Networking, ECI Telecom, Fujitsu Network Communications, Lucent Technologies, and Tellabs all saw sequential revenue increases in the first quarter, Infonetics said.