Global Optical Networking Equipment Spending Declined In 2Q12: Ovum

Global optical networking (ON) equipment spending in 2Q12 declined, despite growth of 6 percent and 19 percent in Asia-Pacific and South & Central America (SCA), respectively, compared with 2Q11. Given 1H12 performance, growth over 2011 will be unlikely without a very big bang in the fourth quarter, according to Ovum.

In a new report, the independent telecoms analyst firm states that the market continues to disappoint and that some vendors are taking advantage of growth pockets better than others.

Dana Cooperson, Vice President and Practice Leader of Network Infrastructure at Ovum, said, “Preliminary analysis of 2Q12 offers more reasons for concern. Global spending in the quarter dropped 8 percent compared with 2Q11 to USD$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 percent to USD$876m and USD$950m, respectively.”

More from Biztech

Future Group - Reliance Retail Deal approved by CCI RBI ban on cryptocurrencies takes effect; prohibition could force investors to tap the black market

“It will be very challenging to make the 2 percent 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.”

The market will need a big 4Q12 to boost 2012 spending. But, as third quarter spending historically declines from 2Q, Ovum does not assume 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.”

“We will advise our clients that 2 percent global growth prospects for 2012 look dim. We are planning a forecast update by the end of the year to incorporate our new product segmentation; we will also update our most likely, optimistic, and pessimistic scenarios as needed,” concluded Cooperson.