Wednesday, May 30, 2012
Aggregation equipment spending falters, but no need to worry
During the past few years, the market for network aggregation equipment, ranging from EPON to fiber-to-the-home systems, has risen at a meteoric pace. The growth has come so quickly that many experts expected serious spending decreases as early as last year, but astronomical demand for new networking systems kept the growth steady for an extended period. That rapid pace of expansion has finally caught up to the aggregation market, as it declined considerably in the first quarter of 2012, a recent Infonetics Research study found.
According to the news source, the decline in the market was only to be expected, as a combination of a slow seasonal period and the slowing of an extremely active investment cycle have combined to limit spending in many areas. Furthermore, a few specific regions and technology types have experienced a decline in investment.
Jeff Heynen, directing analyst for broadband access and video at Infonetics Research, detailed the industry conditions leading to the spending decline.
"In addition to seeing a first-quarter lull as we often do in the worldwide broadband aggregation market, there was a big 43 percent drop in Ethernet PON spending in China that drove spending in Asia down a full third this quarter, despite healthy increases in Japan and the rest of Asia Pacific. The drop in China is due mainly to a shift to FTTH this year and coming off the heels of a record previous quarter," said Heynen.
Furthermore, Heynen explained that the more worrying spending decline took place in the EMEA region, where large-scale economic issues have contributed to a steady decline in networking investments in general. In many cases, projects already in the works in the region have actually stalled because of economic problems that have held back spending.
Reports such as these often need to be taken with a grain of salt. They do not always indicate a lack of interest in emerging technologies, and that seems especially the case when it comes to FTTH. While aggregation equipment may have declined, almost all of the reasons for the fall have nothing to do with the actual technologies and are either natural responses to extended market success or the result of prevailing economic issues. As a result, the decline in spending may not be indicative of a lack of demand for optical network systems.
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