An increase in capital expenditure and the emergence of high-speed networks in the telecom industry opens up new growth opportunities in the synchronous optical network/synchronous digital hierarchy (SONET/SDH) test equipment markets. However, vendors face the challenge of providing sophisticated equipment with enhanced features and scalability at a minimal price.
A Frost & Sullivan report titled "World SONET/SDH Next-generation SONET & OTN Test Equipment Markets" said such solutions would bring in $247.8 million in 2012 after earning $199.6 million last year.
The increase bandwidth demand necessitates the expansion of optical networks, which then drives the adoption of next-generation SONET/SDH technologies.
"Forty gigabit Ethernet and high-accuracy jitter testing offer growth prospects to vendors in this market today," says Frost & Sullivan senior research analyst Sujan Sami. "In addition, the need to test higher SONET/SDH networks such as OC-192 and OC-768 leads to the need for newer, upgraded test equipment."
As service providers (SPs) increase the size of their networks worldwide, the future of the SONET/SDH test equipment markets relies largely on such next-generation test solutions.
Test vendors need to direct their solutions toward SPs and network equipment manufacturers (NEMs), which are currently the two largest end-user segments in the markets.
In 2005, SPs contributed 62.8% and NEMs accounted for 30.8% of total market revenues.
Product differentiation will also be a critical competitive factor for vendors as those that offer integrated solutions that are not only compact and easy to handle, but also demonstrate a high price/performance ratio stand to gain the most.
"Such integrated test solutions must allow end-users to perform multiple tests on various network technologies within a single platform without having to sacrifice the features and functionalities of the solutions," Sujan says.
To get a significant share of the markets, test equipment vendors should closely track customer needs and monitor evolving standards and advancements in SONET/SDH networks.