Despite spending from cloud operators, the Optical and Routing Transport equipment market continued to decline in 1Q24, according to a new report from Cignal AI.
“Cloud Operators continue to provide the financial and technical leadership in the transport equipment market,” said Kyle Hollasch, Lead Analyst at Cignal AI. “Based on our discussions within the supply chain, we don’t expect a recovery in spending from traditional service providers until 2025, at the earliest.”
Additional 1Q24 Transport Hardware Report Findings:
- Spending in North America on Optical Transport equipment declined for the 4th straight quarter, while Routing dropped to levels last seen in 2020.
- Cloud Operator expenditures hit double digits while traditional service providers continued to cut back.
- Sales to Cloud & Colo operators exceeded Service Provider spending for the second consecutive quarter.
- Ciena remains the primary beneficiary of Cloud spending. Network operators in EMEA spent cautiously, apart from buildouts for cloud operators, which grew almost 50%. Chinese operators are upgrading long-haul WDM infrastructure, and the latest contract awards benefitted Huawei, ZTE, and Fiberhome.
- Routing equipment in the region remains flat. Now that Indian operators have completed a series of 5G related builds, spending in RoAPAC (ex-China and Japan) is in a downturn.