Global DWDM Market to Contract 14% in 2001
Growth will resume in 2002, but rates will vary by application and geographic region.
This new study updates the findings of KMI s report on worldwide markets for DWDM systems, completed at the end of November 2000. Shortly after publication of that report the market changed substantially, with an extreme dampening of the market outlook for 2001.
The worldwide market for dense wavelength-division multiplexing (DWDM) transport equipment will decline 14% in 2001 to $7.1 billion. The market will resume growth in 2002, but growth rates will vary sharply by geographic region and by application.
KMI places the strong growth in DWDM spending in 1998-2000 and the subsequent decline in 2001 within the perspective of network building cycles. With the Internet boom starting about 1995, bandwidth demand skyrocketed and new long-distance carriers entered the field by building nationwide long-distance networks using the latest optical fiber and equipment technologies. The market for DWDM systems nearly doubled in both 1999 and 2000, from $2.3 billion in 1998 to $4.2 billion in 1999 and to $8.3 billion in 2000.
With most long-distance network build-outs completed by the end of 2000-with capacity sufficient to meet growing demand-greenfield equipment deployments slowed dramatically in 2001. Carriers typically light only a fraction of capacity on newly deployed systems, so equipment installed in one year will not be filled for several years. With the massive deployments that occurred in 1999 and 2000, 2001 and early 2002 will be slack times as carriers simply fill up unused capacity with channel-card deployments.
By application, the worldwide market for long-haul DWDM systems will fall 23%, but the short-distance market (primarily metro) will grow 63%. Established markets in North America and Europe will fall 23% from $7.8 billion in 2000 to $6 billion, while emerging markets in Asia-Pacific and the rest of the world will experience a doubling of the DWDM market, albeit from low levels.
Using moderate bandwidth demand assumptions, estimated average DWDM systems deployed in 1999 and 2000 will fill to 60%-70% of capacity at staggered rates through 2002 and early 2003. Carriers usually plan new systems deployments before capacity utilization reaches 70%. Thus, forecasts are for a slow rise in DWDM revenues in most markets beginning in 2002 and accelerating into 2003. From 2001, the worldwide market (for systems and channel-cards combined) will grow at a compound annual growth rate (CAGR) of 34% to reach $23.2 billion in 2005.
Contact: KMI Corporation Tel: 401 243 8100 Tel: 800 343 4035 RNadrowski@kmicorp.com
KMI CorporationTel: 401 243 8100
Tel: 800 343 4035
RNadrowski@kmicorp.com
E-mail: RNadrowski@kmicorp.com
