What Will Happen to the Gear Vendors?

Peter : On Rad's Radar?
| 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.


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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