| Several trends have increased the adoption of next-generation equipment over traditional SONET/SDH systems over the past three years. These include the need for better aggregation equipment at the edge of the network, the migration of optical solutions to access networks, cost-competitiveness of next-generation equipment, the move to adopt more efficient technologies, and usage of existing deployments.
Providing the optical market with reports, semi-monthly newsletters, fibre optic route maps and conferences on regional and undersea fibre optic markets, KMI Research, USA, has recently released a report: Optical Networking: SONET/SDH/Next Generation Equipment, in which the company predicts that next-generation SONET and SDH equipment will experience healthy growth from $1 billion in 2001 to nearly $18 billion in annual sales for 2006. According to KMI Research, next-generation equipment will largely replace traditional SONET and SDH equipment, and by 2006, about 90% of SONET equipment sales will be next-generation equipment. Furthermore, KMI Research forecasts that traditional SONET and SDH markets will decline from a high of $17.4 billion in 2000 to $4.6 billion in 2006. The remaining market for SONET and SDH transport equipment will be sales to fill excess capacity on legacy networks.
In addition to the transport market, next-generation equipment will make inroads into the digital cross-connect (DXC) market, the report says. The more flexible platforms and switching capabilities available in this equipment make them ideal tools for DXC functions. But other emerging technologies, such as optical cross-connects and super-band switches, will erode more traditional broadband and wideband DXC markets. This will bring the combined SONET and SDH DXC market down from $4.0 billion in 2000 to $2.6 billion in 2006, KMI says. In anticipation of a rebound in fibre optic equipment sales, many vendors are developing next-generation SONET and SDH products. This will take revenues away from the traditional equipment markets.
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