The optical networking (ON) market, led by strength in Asia-Pacific markets, was $3.9 billion, up 11 percent sequentially but down 9 percent compared with 2Q08.
"This marks the third consecutive quarter that the ON market has shrunk compared with the year-ago quarter, but given the global economic conditions we were not surprised," said Ron Kline, Ovum's research director, Optical Networking.
"Spending in Asia-Pacific remained surprisingly strong, driven by 3G network builds in China.
"The level of spending we're seeing in China has disproportionally benefitted Huawei and ZTE, adding over a share point each to their market positions, and has brought Huawei to the verge of market leadership, an event we think very likely for 3Q09."
Of the top 10 vendors, only Huawei and ZTE posted both sequential and year-over-year revenue gains, reflecting the surge in spending in their home market.
Alcatel-Lucent and Ericsson posted sequential revenue gains but were still off 22 percent and 18 percent from the year-ago period, while Ciena, Fujitsu, NEC, Nokia Siemens, Nortel, and Tellabs all declined sequentially and year over year.
Huawei and ZTE grew revenues by 21 percent and 62 percent, respectively, over 2Q08 due to 3G mobile-related aggregation spending in China.
"Alcatel-Lucent held on to the market lead with 20.7 percent annualised share, but Huawei picked up 1.4 percentage points to come within just 0.2 points of the market leader at 20.5 percent share," said Kline.
"Given the continued strength of spending in China where Huawei is strong, favorable exchange rates, light exposure to North America, and access to capital, it's only a matter of time before we have a new market leader."
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