Infonetics: Firms to invest in 100G networks next year

China's Huawei gains in WDM market at Alcatel-Lucent's expense

Investment in 100G technology for enterprises' core networks is predicted to take off next year, according to Infonetics Research's Optical Network Hardware report.

This year, firms have been trying out 100G prototypes in preparation for major investments next year, said Andrew Schmitt, principal analyst for optical at Infonetics.

Deployment of a 100G optical network is considered key for enterprises to handle the explosion of data traffic expected over the coming years.

Overall, the global optical network equipment market declined 2 percent in the third quarter, dragged down primarily by a 33 percent year-over-year decline in spending on legacy SONET/SDH equipment, according to the report.

A bright spot in the optical network equipment market was the market for wavelength-division multiplexing (WDM) equipment, which posted a 6.9 percent increase from the previous quarter.

China's Huawei led the WDM vendors, mostly at the expense of Alcatel-Lucent (NYSE: ALU), which reported a significant decline in its WDM business. Overall, Alcatel-Lucent posted its lowest-ever optical revenue results in the third quarter, according to Infonetics data.

"Investment in new WDM gear is growing, but it isn't growing fast enough to offset the accelerated declines in SONET/SDH," observed Schmitt. "SONET/SDH spending hit another all-time low in the third quarter, as architectural shifts in wireless backhaul quicken its transition into obsolescence. Carriers aren't allocating scarce capital to out-of-date equipment."

However, spending on ROADM equipment fueled double-digit revenue growth for NEC, Fujitsu and Infinera (Nasdaq: INFN).

The North American optical equipment market, which performed poorly in the third quarter, is predicted by Infonetics to rebound in the fourth quarter with AT&T (NYSE: T) and Verizon (NYSE: VZ) increasing spending on optical equipment.

For more:
- see Infonetics Research data

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