APAC ON market to touch $6.4 billion in 2016

MELBOURNE, AUSTRALIA: The Asia-Pacific optical networking (ON) market will reach revenues of $6.4 billion by 2016, as the sector’s overheated market goes through a cooling down period, predicts Ovum in a new forecast.

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However, the independent telecoms analyst warns that although the APAC market will grow at a compound annual growth rate (CAGR) of four per cent from 2010 to 2016, much less than the astonishing 25 per cent CAGR achieved from 2005 to 2010.

Ovum’s figures show that the market in Asia-Pacific contracted by 2.2 per cent last year and will contract by a further 3.2 per cent in 2011, “although for different reasons.” said Ian Redpath, principal analyst, Ovum. “The 2010 reduction was due to a dry market in Japan and a government-induced freeze in India, while the Chinese market grew. For 2011, we predict growth again from Japan and India but a slowdown in China, caused by an overheated market that needs a little cooling-down period.”

According to Ovum,  China will not cede its place as the second highest contributing country to the global ON market, however the country’s contribution will not likely grow in 2011. At this point, no other countries are candidates to replace China and its rapid growth. The US and the northern European countries collectively are expected to exhibit steady, respectable growth in 2011.

The return of extraordinary growth will most likely come from China when another build cycle comes around, for example  4G wireless, very-high-speed data to the enterprise, or another new service driver.

Ovum’s global forecast report shows a marked improvement for the market when compared to the recessionary period, however it falls short of a strong bounce back. “We expect yet another year of muddling out, with North America continuing to gain momentum; Europe, the Middle East, and Africa (EMEA) improving from contraction to modest growth; and Asia-Pacific beginning a modest retreat”, added Redpath.

Ovum predicts solid growth for North America in 2011 of 12 per cent, up from seven per cent in 2010. Redpath commented: “Emerging technologies will be the driving force in North America. We expect adoption of 100G network building to gain momentum from both carriers and non-carriers.”

In EMEA, which contracted by 10 per cent in 2010, Ovum predicts that 2011 will be a turnaround year, with three per cent growth and a CAGR of 5.5 per cent from 2010 to 2016. Redpath commented: “Developing economies in EMEA still need basic infrastructure and the developed ones are due for a network refresh after two long years of recession-induced restraint.”