Re: Optical Access/Edge/Metro - Stats from CIR
Thread- I heavily edited down this article found on the FCTF thread. I just wanted to post what I thought were the highlights of the PR. IMHO, the article is generally correct in what is facing those equipment providers selling into the metro space. I still am of the belief it will be a larger market than this article predicts. Ironically, this article puts the optical metro market at double what I read about a month ago. So it's heading higher. -MikeM(From Florida)
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Fiber Optic Metro/Access Euphoria Should Be Tempered by Service Provider Caution
Says New Report from Communications Industry Researchers(CIR)
CHARLOTTESVILLE, Va. Sept. 20, 2000-- Overly bullish forecasts for the optical metro/access equipment industry ignore the fact that the potential market for such equipment is dominated by well-established service providers that will continue to be very cautious in their deployment of new platforms.
As much as 70 percent of the sales of optical metro/access equipment may come from traditional carriers with conservative management and an ongoing commitment to SONET. Nevertheless, the reports goes on to say that there will still be significant growth occurring in the metro/access market over the next few years.
Incumbent providers tend to be hesitant to adopt new solutions because of the start-up costs associated with a new technology approach and the fear that they could be stuck with a platform that may not satisfy the demands of their end users in a couple of years. Also, for reasons of corporate culture, the new unregulated businesses within the ILEC organizations will be almost as conservative as their regulated businesses in deploying the latest optical metro/access gear.
Other obstacles preventing some of the bigger carriers making major leaps to the latest solutions in a hurry have to do with both the impact of legacy gear as well as with their requirements to offer a high level of quality of service. Room for new products is limited by the extremely low rate of obsolescence in the public telecommunications space. In addition, some network planners can take many months to test a new device to ensure that it can guarantee bandwidth to its customers with an extremely high level of reliability.
Fears Abound, But Growth Expected
Based on what service providers have told CIR, the successful optical metro/access equipment vendors will be those who understand these factors and build them into their business plans. Companies that fully acknowledge the long lead times and ongoing commitment to SONET legacy networks, will be the ones that survive the inevitable shake out in the optical metro/access space.
CIR believes that there are companies today who don't fully understand the true dynamics of the optical metro/access market and who will ultimately fade from view, rather than issue their promised IPOs. The report notes the fate of Atmosphere Networks, which took some major strategic missteps in the optical access space and was ultimately swallowed up by Ditech at a very low price, should serve as a cautionary tale to both industry executives and investors.
The optical metro/access market will grow from over $1.2 billion in 2000 to $3.5 billion in 2004. The shift to IP and the growing willingness of even traditional service providers to use DWDM, even though it will be mostly for fiber exhaust applications at first, will be important factors in promoting this growth. And while CIR notes that "there is an extraordinary amount of vaporware, when it comes to systems, features or both," it also expects to see significant deployment of next-generation optical metro/access systems beginning in 2001.
CIR also expects to see important niche applications for PONs and optical FDM solutions emerge in the same time frame. Finally, the new CIR report claims that wavelength protection has yet to be delivered, but will emerge as an important issue for some end-user communities -- notably the financial and medical communities.
Realism and the Optical Metro/Access Space
CIR points out that its numbers were based on a primary survey of service provider needs and not on vendor hopes and expectations. |
