Market Share: 2Q09 optical networks, global and regional

Executive summary

In a nutshell

Ovum view

2Q09 quarterly results

Changes to our ON share reporting started in 1Q09

Global spending up sequentially but down versus year-ago period

Key messages

There’s China and then there’s everywhere else

Strong growth in China has benefited Huawei most

Changes in top ten market positions: ZTE and Tellabs move up; NEC, Ericsson, and Ciena move down

Continuing demand for ON gear

Foreign exchange shifts complicate market analysis

“Slow” me the money

Market share — global

Regional imbalances, emerging market growth, and architecture evolution to WDM cause share shifts

Market share changes

Analysis of quarterly results

Market growth and outlook

Strong Asia-Pacific market growth offsets global decline; WDM growth is lagging expectations so far in 2009

Regional analysis — all regions

Asia-Pacific becomes the largest ON region; China and India market growth not affected by economic malaise

Product-level analysis

Segment overview: Wireless backhaul growth reverses the “metro WDM for aggregation” substitution trend

Challengers’ interest in SLTE market grows despite lumpy spending and Alcatel-Lucent’s solid control of the top spot

Regional analysis — Asia-Pacific

China’s 3G build-outs drive 28% growth from last year in AP; aggregation surges on wireless carrier spending

Market share changes

Analysis of quarterly results: Huawei’s >60% China share supports AP dominance; Alcatel-Lucent, ZTE, Nortel are strong multi-country players

Subregional Asia-Pacific results

Market growth and outlook

2009 spending well ahead of forecast; strong wireless carrier spending pushing aggregation, BWM, and China ahead of expectations

Product-level analysis

Aggregation given new lease on life by wireless network growth; CPO and metro ROADM grow 90-100% YoY, but 40G not yet driving backbone WDM

Regional analysis — EMEA

2Q09 market drops 25% versus last year but ekes out 7% sequential growth; Huawei’s rolling share hits 20%

Market share changes

Analysis of quarterly results: Huawei and ZTE gaining at nearly all others’ expense but Alcatel-Lucent still has commanding lead

Subregional EMEA results

Market growth and outlook

2009 spending on track with forecast

Product-level analysis

Metro WDM takes a breather as bandwidth management surges sequentially and backbone WDM picks up with coming 40G build-outs

Regional analysis — North America

2Q09 market shows some stability; rolling average falls below $4 billion for first time since 2Q06

Market share changes

Analysis of quarterly results: Fujitsu overtakes Alcatel-Lucent by a fraction of a point

Market growth and outlook

North American ON spending in 1H09 stymied by economic conditions; market tracking with pessimistic forecast

2009-14 outlook

Product-level analysis

2Q09 saw some stabilization of revenues; year-over-year and annualized metrics still on the decline

Regional analysis — SCA

SCA market still in decline; only region to fall sequentially

Market share changes

SCA market is concentrated at the top; large tenders have greater affect on share changes

Market growth and outlook

Economic slowdown sends SCA ON forecast to pessimistic scenario

2009-14 outlook

Product-level analysis

More than 55% of all SCA spending is on aggregation but WDM has the strongest growth

List of Tables

Table 1: Analysis of quarterly results, global ON, 2Q09

Table 2: 1H09 global ON spending versus current 2009 forecast

Table 3: Analysis of quarterly ON results, Asia-Pacific, 2Q09

Table 4: Market share by subregion, Asia-Pacific ON, 1H09

Table 5: 1H09 Asia-Pacific ON spending versus current 2009 forecast

Table 6: Product segment-level market assessment, Asia-Pacific, 2Q09

Table 7: Analysis of quarterly ON results, EMEA, 2Q09

Table 8: Market share by subregion, EMEA ON, 1H09

Table 9: 1H09 EMEA ON spending versus current 2009 forecast

Table 10: Product segment-level market assessment: EMEA

Table 11: Analysis of quarterly ON results, North America, 2Q09

Table 12: 1H09 North American ON spending versus current 2009 forecast

Table 13: Product segment-level market assessment: North America

Table 14: 1H09 SCA ON spending versus current 2009 forecast

Table 15: Product segment-level market assessment: SCA

List of Figures

Figure 1: Global ON market revenues by quarter, 3Q07-2Q09

Figure 2: Huawei vs. Alcatel-Lucent global 2Q09 market share comparison with and without China

Figure 3: Foreign exchange shifts favor Asian vendors

Figure 4: Comparison of annualized ON market share for the top five global vendors

Figure 5: Market share (rolling 4 quarters), global ON

Figure 6: Global market share gains and losses (rolling 4Q) for 2Q09

Figure 7: Global ON market by region, rolling 4 quarters, 2Q09 vs. 1Q09

Figure 8: Global ON market by segment, rolling 4 quarters, 2Q09 vs. 1Q09

Figure 9: Rolling 4Q spending in aggregation vs. metro WDM, global

Figure 10: Quarterly product segment growth rates, 3Q08-2Q09

Figure 11: Market share (rolling 4 quarters), Asia-Pacific ON

Figure 12: Comparison of annualized ON market share for the top four Asia-Pacific vendors

Figure 13: Asia-Pacific market share gains and losses (rolling 4Q) for 2Q09

Figure 14: Market share (rolling 4 quarters), EMEA ON

Figure 15: Comparison of annualized ON market share for the top four EMEA vendors

Figure 16: EMEA market share gains and losses (rolling 4Q) for 2Q09

Figure 17: Market share (rolling 4 quarters), North American ON

Figure 18: Comparison of annualized ON market share for the top four North American vendors

Figure 19: North American market share gains and losses (rolling 4Q) for 2Q09

Figure 20: Comparison of annualized ON market share for the top three South and Central American vendors