An increase in capital expenditure and the emergence of high-speed networks in the telecommunications industry is opening up new growth opportunities in the synchronous optical network [define]/synchronous digital hierarchy [define] (SONET/SDH) test equipment markets, according to Frost & Sullivan, Palo Alto, Calif.-based consulting company.
However, the firm adds, vendors now face the challenge of providing end users with sophisticated equipment with enhanced features and scalability at a minimal price.
According to Frost & Sullivan, the World SONET/SDH Next-generation SONET & OTN Test Equipment Markets earned revenues of $199.6 million in 2005 and is estimated to reach $247.8 million in 2012.
With the increase in demand for bandwidth, the company reports, there is a need to expand the capacity of optical networks, which in turn, drives the adoption of next-generation SONET/SDH technologies.
"Forty gigabit Ethernet and high-accuracy jitter testing offer growth prospects to vendors in this market today," says Frost & Sullivan Senior Research Analyst Sujan Sami. "In addition, the need to test higher SONET/SDH networks such as OC-192 and OC-768 leads to the need for newer, upgraded test equipment."
With service providers increasing the size of their networks worldwide — mostly outside North America — the future of the SONET/SDH test equipment markets relies largely on such next-generation test solutions, according to Frost & Sullivan.
Test vendors need to direct their solutions toward service and network equipment manufacturers, which are currently the two largest end-user segments in the markets. In 2005, service providers contributed to 62.8 percent and network equipment manufacturers, 30.8 percent of total market revenues.
Product differentiation, Frost & Sullivan reports, is likely to be a critical competitive factor for vendors looking to promote their next-generation test products. Vendors that offer integrated solutions — that are not only compact, easy-to-handle units, but also demonstrate a high price/performance ratio — stand to gain the most.
"Such integrated test solutions must allow end users to perform multiple tests on various network technologies within a single platform without having to sacrifice the features and functionalities of the solutions," notes Sujan.
In order to obtain a significant share of the markets, test equipment vendors not only need to closely track customer needs, but should also monitor evolving standards and advancements in SONET/SDH networks.
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