Gartner Says DSL Equipment Market Grew 16 Percent in the Second Quarter of 2003
STAMFORD, CONN., August 15, 2003 — Despite weak economic conditions, the worldwide digital subscriber line (DSL) equipment market posted strong growth in the second quarter of 2003, according to preliminary results by Gartner, Inc. (NYSE: IT and ITB).
Worldwide digital subscriber line access multiplexer (DSLAM) port shipments reached 9.8 million units, an 81.3 percent increase from the same period a year ago and a 16.5 percent rise quarter over quarter. Worldwide customer premise equipment (CPE) shipments increased 59.5 percent year over year and 16.2 percent quarter over quarter to 8.1 million units in the second quarter of 2003 — marking the third consecutive quarter of record DSL equipment shipments.
"Cost is clearly the key in the DSL equipment market," said Jouni Forsman, principal analyst for Gartner's worldwide Telecommunications and Networking group. "The average vendor revenue per port dropped from $95.9 in the first quarter of 2003, to $84 in the second quarter, and in the following quarters, prices will continue to be challenged. Vendors must continue rolling out increasingly cost-effective equipment, while maintaining future value-added service capability of the platform."
Alcatel was the leader in the worldwide DSLAM market in the second quarter of 2003 with 31.9 percent of port shipments (see Table 1). Huawei was the No. 2 vendor with 17.5 percent market share. UTStarcom, Siemens and NEC rounded out the top five. The DSLAM market is already very concentrated, and even more concentration is expected as carriers are focusing on a limited number of strategic suppliers.
Table 1
Preliminary Top Worldwide xDSL CO Vendors' Port Shipments Estimates for 2Q03
(Thousands of Units)
Company
2Q03 Port Shipments
2Q03 Market Share (%)
2Q02 Port Shipments
2Q02 Market Share (%)
Growth (%)
Alcatel
3,120.7
31.9
1,670.9
30.9
86.7
Huawei
1,710.0
17.5
NA
NA
NA
UTStarcom
795.8
8.1
466.0
8.6
70.7
Siemens
718.9
7.3
352.7
6.5
103.8
NEC
687.0
7.0
500.0
9.3
37.4
Others
2,755.0
28.1
2,407.3
44.6
14.4
Total
9,787.4
100.0
5,396.9
100.0
81.3
Source: Gartner Dataquest (August 2003)
Thomson was the No. 1 vendor in the CPE market in the second quarter of 2003, with 9.9 percent of port shipments, followed by Siemens with 9.2 percent market share (see Table 2). Market leaders have been forced to give up market share to new entrants: The top five vendors made up 42.6 percent of the market, down from 47 percent a year ago.
Table 2
Preliminary Top Worldwide xDSL CPE Vendors' Port Shipments Estimates for 2Q03
(Thousands)
Company
2Q03 Port Shipments
2Q03 Market Share (%)
2Q02 Port Shipments
2Q02 Market Share (%)
Growth (%)
Thomson
807.0
9.9
574.5
11.3
40.4
Siemens
747.2
9.2
945.6
18.6
-20.9
Ambit
660.0
8.1
NA
NA
NA
ZyXel
649.6
8.0
403.8
7.9
60.9
NEC
598.9
7.4
467.0
9.1
28.2
Others
4,648.9
57.3
2694.9
53.0
72.5
Total
8,111.6
100.0
5,085.8
100.0
59.5
Source: Gartner Dataquest (August 2003)
Asia/Pacific and Latin America showed the strongest regional growth in the second quarter of 2003, while Japan and North America registered declines. The regulatory situation in the United States is difficult, and the competitive power of cable is strongly felt. Major incumbents are also looking into fiber as a DSL alternative. Asia/Pacific's growth was mainly driven by an exceptionally strong Chinese market. Europe also showed robust growth, with the major incumbents in the region moving ahead with DSL broadband plans. Vendors should expect the European and Chinese markets to be the major growth drivers for the next few quarters.
"DSL equipment growth will continue for the next few quarters as a higher number of carriers enter deployment phase," said Gauri Pavate, principal analyst for Gartner's worldwide Telecommunications and Networking group. "China will continue to increase in importance as an individual key market. CPE shipments will have to increase to catch up with the installed base of central office (CO) ports, and the unit growth on this side of the business will be stronger than CO in the future."
Additional information is available in the Gartner Dataquest Alert Strong Growth in DSL Equipment Market Continues in 2Q03. This Alert examines the state of the worldwide DSL equipment industry and looks at developing trends and the performance of the top-tier vendors. This report can be purchased on Gartner's Web site.
This analysis is provided by Gartner's worldwide Telecommunications and Networking group. This group provides an analysis for the full spectrum of telecom and networking issues. To keep up to date on the latest telecommunications issues, please visit Gartner's Telecommunications Focus Area at www.gartner.com/telecom-mkt. To purchase reports or subscribe to Gartner programs, call 408-468-8000 or go to www.gartner.com.
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