Routers rebound now; optical, wireless later

The worldwide router market will grow six per cent over the next five years, while optical transport and mobility infrastructure won’t see significant growth until 2005, according to Dell’Oro Group Inc.

In a set of five-year forecasts, Dell’Oro said the router market will grow from US$6.3 billion in 2003 to US$8.6 billion in 2008. The second half of 2003 was the “turning point” for the market, which had experienced declining sales for several years, Dell’Oro states.

Telecommunications service providers and businesses are planning to increase investment in their router networks this year, and Dell’Oro expects this trend to continue for the next five years.

The optical transport equipment market will be flat this year, after years of decline, and will return to sales growth in 2005, Dell’Oro says. Optical transport equipment sales will reach US$7.3 billion by 2008, the firm predicts, from US$6.1 billion in 2003.

Metro applications will lead the recovery as service providers focus on differentiated service offerings, Dell’Oro said. In 2004, the firm estimates that 65 per cent of optical transport equipment sales will be deployed in a metro application, vs. 30 per cent three years ago at the peak of the optical market.

Meanwhile, the total mobility infrastructure market — GSM/GPRS/EDGE, TDMA, CDMA, and WCDMA — will decline one per cent in 2004 to US$25.7 billion, and then begin to rebound in 2005 with five percent growth, Dell’Oro said. Growth is forecast to accelerate to 13 per cent in 2006 due to new deployments in China, and CDMA 1X-EV-DO and DV upgrades.

In 2006, WCDMA infrastructure revenues and base station shipments are set to surpass those of GSM-based systems.

The total market, driven largely by WCDMA, will increase seven per cent in both 2007 and 2008, reaching US$34.8 billion in 2008, the firm said.

Trends fueling the recovery include an improving global macroeconomic environment; improving service provider economics, such as stabilized average revenue per user per month, and a low capex-to-revenue ratio; and a proliferation of subscriber handsets with color screens and cameras, which will spur application development.

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