After a challenging 2012 and a weak first quarter 2013 outlook, independent telecoms analyst firm Ovum (News - Alert) is expecting a modest growth for the Optical Components (OC) vendors this year. The research firm’s latest data shows that global OC components will grow 4 percent in 2013.

The Ovum report further indicates that the global OC market posted a revenue of $6.3 billion in 2012 – down 3 percent from the 2011 level. This decline is attributed to capacity constraints caused by the Thai floods and soft demand from macroeconomic uncertainty. As per the report, the 2012 revenue contraction obscured a transition. The optical communications market moved to new high-speed transmission in 2012.

According to Practice Leader Components Telecoms at Ovum and author of the market share alert, Daryl Inniss, “Vendors have good reason to be cautiously optimistic about 2013 as Ovum believes demand for 100G transmission gear will enter mainstream. Multiple component vendors introduced products like coherent 100G DWDM transponders in anticipation.”

The report additionally indicates that Telecom has passed the introductory phase of 100 Gbps, which is ready to enter the mainstream in 2013. Meanwhile, Datacom is transitioning to 16 Gbps Fibre Channel for storage, and Ethernet high-density 40 Gbps transceivers in the QSFP form factor are expected to ramp in volume in 2013. Inniss added, “Many of these products will blossom into the mainstream market in 2013, providing the boost that OC needs to start churning positive revenues again.”

As per the study, WTD, Fujitsu (News - Alert) Optical Components, CyOptics and NeoPhotonics posted the strongest 2012 market share gains among the top 10 suppliers. Their strength comes from transceivers and telecom discrete components for 40 and 100 Gbps markets. The analyst expects to see continued high demand for these components and modules in 2013 and beyond.

“Although the outlook for 1Q13 is for low single digit contraction, partly due to annual price declines that take affect after the first quarter of the year. Ovum expects the OC market to expand 4 percent in 2013, in part, to support the continuing annual double digit traffic growth,” Inniss concluded.