As the long-haul dense wavelength division multiplexing (DWDM) market continues to languish, vendor and industry attention is shifting toward metro WDM, an early-stage next-generation optical equipment segment. In a new study, IDC forecasts that metro WDM revenue will increase from $484 million in 2002 to $1.5 billion by the end of 2007, representing a 25.3% compound annual growth rate (CAGR).
“Vendor and industry attention is increasing in metro WDM,” said Sterling Perrin, senior research analyst in IDC’s Optical Networks program. “Although metro WDM will not compensate for the sharp drop that vendors have experienced in their long-haul and legacy lines, it will be an important growth opportunity within optical networking.”
Driving growth will be customer-facing applications including Gigabit Ethernet services and SAN extension. Carriers are increasingly deploying metro WDM equipment as infrastructure for new Gigabit Ethernet service offerings to end customers. In a similar fashion, carriers are deploying metro WDM gear to offer managed wavelength services to end customers for carrying their storage traffic across metro areas. Business continuity and disaster recovery applications, in part prompted by security considerations, are driving the enterprise SAN extension deployments.
Fiber relief – the initial driver of metro WDM deployments – will also remain an important application, but its dominance will diminish over the next five years, IDC predicts. The collapse of the CLEC bubble and the shift in spending back to incumbent carriers are the biggest reasons for the change. With far fewer green field network builds there is less need for WDM as an alternative to fiber in the metro core. Moreover, general capital constraints and the focus on “success-based builds” favor the applications, such as Gigabit Ethernet and SAN extension, that are closer to the customer and closer to revenue.
IDC’s recently released study, Worldwide Metro WDM Forecast and Analysis, 2003-2007 (IDC #29346), forecasts the five-year revenue opportunity for metropolitan WDM equipment from 2003 to 2007. IDC breaks down metropolitan WDM equipment by major interface type as well as by geographic region, including North America, Europe, Asia/Pacific, and the rest of the world (ROW). In addition, IDC forecasts total metro WDM channels that will be shipped from 2003-2007. The study identifies the market share leaders for 2002 on a worldwide level and in the North American market.
