Infonetics Research reported bullish outlooks for both the microwave and millimeter-wave segments of the backhaul market despite the "Clearwire (NASDAQ:CLWR) effect," which stunted the latter technology's expected footprint in 2011.
Infonetics said the global mobile backhaul equipment market grew 8 percent to $7.4 billion in 2011, following a 10 percent increase the previous year. The firm is predicting a cumulative $39 billion will be spent on mobile backhaul equipment over the five years from 2012 to 2016.
"Although the microwave equipment market ended down a bit in 2011 compared to the previous year, the market is poised to return to growth as LTE backhaul needs accelerate, particularly Ethernet microwave gear," said Richard Webb, directing analyst for microwave at Infonetics.
Microwave is expected to become established as the primary backhaul solution for outdoor small cells, the proportion of which is increasing in 3G and post-3G networks.
According to Infonetics, "Huawei stole the microwave equipment market share lead" in the fourth quarter of 2011, though market leader Ericsson (NASDAQ:ERIC) maintained its No. 1 position for annual revenue for the third consecutive year in 2011." Ericsson racked up 22 percent of global revenue in the mobile backhaul microwave radio market during 2011.
Infonetics calculated that the overall microwave equipment market rose 4 percent in the fourth quarter of 2011 over the third quarter of 2011 to reach $1.35 billion worldwide. However, for the full year, the microwave equipment market was down 6 percent to $5.3 billion, largely due to rapidly declining TDM equipment sales and price erosion in the hybrid TDM/Ethernet segment. Sales of all-packet Ethernet microwave gear were up 19 percent in 2011. Infonetics projects the market for Ethernet-only microwave equipment will expand nearly five-fold from 2011 to 2016, while the global microwave equipment market--including TDM, hybrid, and Ethernet-only equipment--is predicted to total $5.6 billion in 2016.
The millimeter-wave equipment arena--which includes unlicensed E band 60 GHz, licensed E band 70-90 GHz and W band 75-110 GHz--suffered in 2011 from what Webb described as the "Clearwire effect," which occurred when the operator shifted its focus from rolling out WiMAX to developing TD-LTE. Clearwire had made considerable millimeter-wave backhaul investments for its WiMAX network, but curtailment of that network's expansion prompted a steep decline in the overall millimeter-wave market last year.
Nonetheless, Infonetics is forecasting a 63 percent compound annual growth rate (CAGR) for millimeter-wave equipment revenue during 2011-2016. "The market will be driven by wider availability of licensed and unlicensed millimeter-wave products and as demand for high-capacity mobile backhaul solutions for metro areas with high cell density-and small cells in particular increases with the deployment of 4G networks," said Webb.
Infonetics estimated that the global millimeter-wave equipment market tallied $45 million in 2011.
Mobile backhaul is clearing driving growth in this market segment as the percentage of total millimeter-wave equipment revenue stemming from mobile backhaul applications grew from 20 percent in 2009 to 59 percent in 2011. "Despite the overall dip in the market, sales of E Band 60GHz unlicensed spectrum millimeter wave equipment for mobile backhaul networks grew almost 80 percent in 2011," the company said.
BridgeWave currently dominates both the 60 GHz unlicensed and 70-90 GHz licensed millimeter-wave equipment segments. However, Infonetics predicts vendor market shares will shift considerably during the next 12-18 months.
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