The global optical networking market has reached a new post-2001 high of $US4.4 billion which was driven by blockbuster revenue postings by Alcatel-Lucent and Huawei, according to an Ovum report for the fourth quarter of 2007.

The research firm said Alcatel-Lucent posted $1 billion and Huawei $800 million which pushed annual spending to $15 billion.

"This figure is $300 million over our optimistic expectation; that isn't pocket change even for Bill Gates," Ovum's VP of optical networking, Dana Cooperson said.

While numbers cannot be finalized until ZTE reports its figures in late March, Cooperson said there has been a lot of shifting competitive dynamics due to vendor consolidation and growth in spending across all next-generation product segments that far exceeds declines in legacy gear.

She said spending on next-gen multi-service SDH/SONET gear rose to a new post-bubble high of nearly $1.9 billion for the quarter, propelled by huge sequential spending increases in Asia-Pacific and CALA, versus a new high of $0.9 billion for metro DWDM.

"Contrary to popular myth that has Ethernet delivering a swift and decisive death blow to SDH/SONET, a range of applications will continue to exist for SONET/SDH-based devices in evolving networks, particularly as the products themselves evolve to allow more efficient switching, aggregation, and transport of data-based traffic," Cooperson said.

"But WDM gear is likewise evolving to be more data friendly and is increasingly claiming the metro core from SDH/SONET as it dominated the backbone 10 years ago."

In the Asia-Pacific, the market remains mixed.

While ZTE results are not finalized yet, the Asia-Pac region was up at least 10 per cent for the year, despite continued slow sales in Japan.

Alcatel-Lucent grew at least 20 per cent in every region across the globe outstripping market expectations along with Huawei.

Nokia Siemens Networks also did well with Cooperson pointing out that its performance would look astounding in any other quarter but pales in significance against the gravity-defying results of Huawei and Alcatel-Lucent.

The company was up 28 per cent with $900 million in sales for 2007.

Looking at the rest of the top 10 vendors, Cisco Systems' quarterly revenues exceeded $200 million to top $700 million for the year while Nortel grew five per cent to reach $1.2 billion for the year.

Sales at Ciena for the fourth quarter were up 47 per cent over the same period in 2006. Tellab's revenue declined 13 per cent from 2006 levels to $804 million.

NEC's full year revenues reached $657 million but there was a four per cent decline in the Asia Pacific region due to continued Japanese market doldrums. Ericsson's revenues were up 15 per cent over 2006 levels topping $800 million for 2007 while Fujitsu had a decline of two per cent with sales reaching $880 million.