Global optical equipment market continues to disappoint

Worldwide spending on global optical networking equipment contracted in the second quarter of this year on an annual basis, despite growth of six per cent in Asia-Pacific and South & Central America (SCA), says a new report from business analysts Ovum (part of Informa Telecoms & Media, publisher of Telecoms.com).

Given the sector’s weaker performance across the first half of this year, it now looks unlikely that there will be any growth for 2012 as a whole unless there is a “very big bang” in the year’s fourth quarter, the study adds.

Dana Cooperson, Vice President and Practice Leader of Network Infrastructure at Ovum, says: “Preliminary analysis of 2Q12 offers more reasons for concern. Global spending in the quarter dropped eight per cent compared with 2Q11 to $3.8bn.

“This is the second year-over-year drop in a row. The global decline was mainly driven by spending softness in North America and EMEA, each down 19 per cent to $876m and $950m, respectively.

“It will be very challenging to make the two per cent growth we’ve predicted for the year, although as Asia-Pacific and SCA become a larger part of the global market, spending is shifting strongly to the fourth quarter.”

Due to third quarter spending usually declines in comparison to the second quarter of a given year, Ovum does not expect any improvements next quarter, Cooperson said.

“With 1H12 behind us, we are trending toward our pessimistic scenarios in North America and EMEA. Despite good prospects in Asia-Pacific and SCA, this was not sufficient throughout the first half of the year to push the global market to growth.

“Prospects in the eurozone have not yet improved and are unlikely to turn around quickly. Prospects for North American tier-2 carriers are improving, but any growth in spending may not make up the gap for vendors that depend on spending by the largest carriers.”