Optical network hardware sales up 20%, service provider router and switch sales up 6% in 2Q06

Infonetics: worldwide optical network hardware revenue jumped 20% between the first and second quarter of 2006, reaching $3.1 billion in 2Q06, mainly due to big gains by Huawei and Alcatel. The market is forecast to grow 14% between 2005 and 2009, when it will reach $12.3 billion.

Huawei is the big story this quarter, with sales up an amazing 83% and a larger foothold in the EMea region. For the first time in optical network hardware market history, Alcatel is not in first place. Huawei jumped from 4th to 1st in one quarter, a rare feat. Next quarter may be a different story.

2Q06 Optical Network Hardware Highlights

• On the leaderboard: #1 Huawei, #2 Alcatel, #3 Nortel, #4 Tellabs

• Many manufacturers had up quarters: ADVA, Alcatel (up 25%), Cisco (up 23%), ECI, Ericsson, Huawei, Nortel, Siemens, Sycamore, Tellabs, Transmode, ZTE, and others

• WDM ROADM switch hardware sales are up 23%

• Metro equipment makes up 68% of all optical network hardware revenue, long haul 32%

• 35% of worldwide optical network hardware sales come from North America, 33% from EMea, 27% from Asia Pacific, and 5% from CALA

Worldwide sales of carrier Ethernet switches and routers are up 12% to $837 million in 2Q06, with annual sales expected to increase 113% between 2005 and 2009.

The overall service provider router and switch market—which includes carrier Ethernet switches, IP core and edge routers, enterprise-class Ethernet switches, and multiservice core and edge ATM switches—is up 6% to $2.38 billion in 2Q06.

The service provider multiservice ATM switch segment continues its downward trend (down 24% since this time last year), while the IP and Carrier Ethernet switch and router segments continue to climb, commented Howard. Carriers are outfitting their data networks to handle the coming IPTV traffic, and outfitting their mobile networks for the expected onslaught of mobile video and data traffic. Carrier Ethernet-grade equipment meets these needs.

2Q06 Service Provider Router and Switch Highlights

• Cisco maintains its #1 position in the overall service provider router and switch market, with 45% of worldwide revenue, followed by Juniper, then Alcatel, which posted a 16% increase in sales this quarter

• Cisco also maintains its #1 position in the burgeoning carrier Ethernet switch and router segment, Alcatel is second

• worldwide IP core and edge router sales are up 9%

• 65% of worldwide service provider router and switch sales come from routers, 18% from carrier Ethernet switches, 16% from multiservice ATM switches, and 1% from enterprise-class Ethernet switches

• 40% of all service provider router and switch revenue comes from North America, 33% from EMea, 21% from Asia Pacific, and 6% from CALA

Infonetics’ Optical Network Hardware Publ 20060906