Growth projected in telco equipment

Three optical transport market segments will resume growth this year, while routers and mobile wireless infrastructure will have to wait until 2004, according to the latest figures from Dell'Oro Group Inc.

Metro DWDM, Multiservice SONET/SDH and optical switches are projected to have positive growth from 2003 through 2007, Dell'Oro reports. The overall optical transport equipment market, however, will decline through 2005 due to further depression in long-haul DWDM and SONET/SDH add-drop multiplexers, according to the research firm.

Worldwide, Metro DWDM will grow from US$400 million in 2002 to US$600 million in 2007, a compound annual growth rate (CAGR) of 7percent, according to Dell'Oro. Multiservice SONET/SDH will grow from US$1.3 billion to US$2.3 billion during the same period - a CAGR of 11percent - while optical switches will go from US$300 million to US$400 million, a CAGR of 9percent, Dell'Oro states.

The total worldwide optical transport market will resume growth in late 2005, reaching US$6.6 billion in 2007, according to the research firm.

The worldwide router market, meanwhile, is projected to decline in 2003 for the third straight year before returning to growth in 2004. Dell'Oro forecasts the router market declining 2percent in 2003 to US$6.2 billion, and then growing at an average annual rate of 6percent through 2007.

Growth will be spurred by service providers allocating larger portions of their equipment budgets to high-end routers that help deliver new services, Dell'Oro states. Service providers will also begin replacing older systems with higher-performance routers next year, the firm asserts.

Next year will also see a slow recovery in mobile wireless infrastructure sales after a down 2003, Dell'Oro states.

On the strength of WCDMA, and to a lesser extent CDMA, along with the prolonged lifecycle of GSM-based infrastructure, Dell'Oro forecasts that the overall market will experience high single-digit growth beginning in 2005.

The market will reach nearly US$34 billion in 2007, the firm predicts, and service-related revenues will add another 20percent to 30percent.

Wireless penetration into developing economies and the success of data services remain the keys to growth for this industry, Dell'Oro affirms. Voice channel shipments will continue to grow by double digits each year through 2007.

In the near term, however, the decrease in average selling prices will be greater than the increase in voice channels, resulting in either revenue declines or soft revenue growth, Dell'Oro says.

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