SAN JOSE, Calif., May 29 -- Reduced capital expenditure due to the economic slowdown is limiting end-users' demand for test equipment. Struggling vendors are pinning their hopes on evolving network technologies for market revival, as testing is essential for these new technologies, according to a new analysis from Frost & Sullivan.
This market generated revenues worth $2 billion in 2002 and is likely to reach $2.3 billion in 2006, according to the report, "Opportunity Analysis of Telecommunication & Data Communication Test Equipment Market."
"Vendors are hard-pressed to sell, as network equipment manufacturers and service providers are reevaluating their expansion plans and prefer to wait until the capital markets improve," said Frost & Sullivan research analysts Jessy Cavazos and Sailaja Tennati. Moreover, they said, the shift in purchasing decisions to top management is prolonging sales cycles and reducing the revenue flows.
The demand for various testing equipment is expected to pick up as new network technologies evolve. These include dense wavelength division multiplexing, next-generation synchronous optical network/synchronous digital hierarchy, Gigabit Ethernet, resilient packet ring, voice over internet protocol, digital subscriber line and asynchronous transfer mode over multiprotocol label switching.
New standards and protocols increase in high-bandwidth applications' convergence of voice, video and data, and growing Internet and intranet traffic are also expected to augment the need for sophisticated testing. As the complexity of networks increase, end-users are demanding integrated solutions and high-quality services. Companies that address these requirements are likely to witness rapid growth, Frost & Sullivan said.
"There is a growing need to focus on multiple end-user markets and vendors should continuously innovate, reposition and provide complete yet modular solutions," said Cavazos.
For more information, visit: www.frost.com