Global equipment sales falter in third quarter
Global spending on network equipment stalled or declined in the third quarter across multiple market segments, according to three separate research reports.
Ovum estimates that the optical networking market contracted for a third straight quarter, with spending down 1% year-on-year to $3.7 billion (€2.8 billion).
While spending grew 14% in APAC, this wasn't enough to offset declines of 11% in North America, 8% in EMEA and 4% in South and Central America.
Ovum principal analyst for network infrastructure Ron Kline said based on recent performance, “it will be very difficult for the market to reach the 2% growth we have predicted for the year.”
He said many vendors were happy just to see their ON business stay flat during the rough quarter, with Ericsson, Fiberhome, Huawei and EC being the only top vendors to post both sequential and year-on-year revenue growth.
Separately, ACG Research warned that the global mobile IP infrastructure market shrank 4% during the quarter.
The research firm blamed diminishing revenues from traditional 3G technology as operators rethink their capex and opex models in the face of the data tsunami.
ACG expects a “massive reduction” in macrocell spending over the next five years, as small cells become more mainstream and operators place a greater emphasis on optimizing existing network assets. Some vendors will face double-digit declines in 3G revenues as a consequence.
The firm predicts that small cells will carry 50% of service provider data traffic by 2016.
Finally, Dell'Oro reported that the 10 Gbps Ethernet controller and adapter market was virtually flat during the quarter, even though the period “should have marked the beginning of widespread adoption of 10 Gbps server connectivity.”
The analysts believe 10 Gbps services are priced at too high a premium to 1 Gbps services, leaving customers to keep opting for the latter. This and slow migration to Romley servers are impeding market growth.