Amid the generally depressing industry results during this financial week, a study offers a beacon of hope to foundering network equipment makers — or at least, some of them.
Metro Networks: The New Hotspot, from Infonetics Research, says the metro network market is hopping and will only grow stronger. Equipment spending will grow from 2000's $6.3 billion to $17.2 billion in 2003, the study says.
Metro networks are a bottleneck, "choking the network between homes or business and the long-haul backbones to which they connect," the study says. Metro networks are made of the last-mile segment, connecting businesses and homes to a CO; the metro edge segment, aggregating and grooming traffic, and applying services; and the metro core, transporting traffic between COs.
The metro network consists largely of TDM technology and isn't prepared to handle the bandwidth, the study reports. In businesses on the network, "Desktops may have 100M Ethernet for internal connections, but for the majority of businesses, the connection from the LAN to the WAN or Internet is dial, DSL or T-1. The local loop has become a mere sipping straw that cannot satisfy the growing metro area bandwidth thirst."
Such companies as Nortel Networks, Lucent Technologies and ONI Systems see growth already. Although Nortel reported growing losses yesterday (see above), reductions in its circuit switching market were nearly offset by considerable growth in its optical metro and core IP network areas, it reports. Likewise, ONI Systems reported losses for its first quarter, but upped its second-quarter revenue forecasts, driven by the metro network market. Finally, in March, Lucent's Optical Fiber branch invested $250 million to expand its AllWave metro fiber production capacity in its Norcross, Ga., plant.
The study lists 10 reasons why the networks are targeted for rapid growth, including location of service providers' data centers, which are in major metro areas; major companies have several sites in an area, with data centers, and need to talk to each other; and companies increasing their connection speeds.