What Will Happen to the Gear Vendors?

Peter : On Rad's Radar?
Peter
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

What Will Happen to the Gear Vendors?

There used to be a class 4 switch called Coppercom. It was a decent switch and reasonably priced. The company couldn't make a go of it because the ISP and CLEC market was shrinking at the time.

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Yesterday there was an announcemnet that telecom CAPEX (capital expenditures) have shrunk. Credit Suisse says the two remaining RBOC's account for nearly 60% of U.S. telecom gear spending. Both companies have diminished spending, especially on the copper plant and DSL. VZ isn't rolling out any more DSL or FiOS - instead they are co-marketing cable!

Ripples in the pond or butterfly wings - no matter how you want to look at it. What will happen to the gear vendors? Tellabs, Ditech Networks, Sonus Networks, Ciena, Adtran, Alcatel-Lucent, Westell Technologies, and Acme Packet are all exposed to the CAPEX plans of the RBOCs.

I see four factors exacerbating this situation:

  • ZTE and Huawei are creeping in to the US market either.
  • Consolidation results in less customers for these vendors.
  • With 60+% of RBOC revenue from cellular, spending will lean to wireless, backhaul.
  • The move to cloud services means CAPEX is going to a new set of vendors.

Telecom is looking gloomy not cloudy.



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