DSL Paradox: Shipments Stall, Revenues Drop - InformationWeek

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DSL Paradox: Shipments Stall, Revenues Drop

Despite the downturn, an Infonetics Research report says, the market has strong potential and will see long-term growth.

Worldwide port shipments of digital subscriber line (DSL) aggregation hardware rose only slightly while revenues actually dropped in the first quarter of this year. However, according to a new report from Infonetics Research, the market still has a strong potential and should see long term growth.

Indeed, DSL aggregation hardware growth slowed down at the beginning of this year. Port shipments were up only 2% in the first quarter, after a 9% rise in the last quarter of 2004, and revenues dropped 2% to 1.4 billion after they grew 14% in the fourth quarter of last year.

Nevertheless, consumer demand for DSL services has remained strong, with the number of subscribers worldwide soaring 70% last year to reach 98.6 million. According to Infonetics, that number will top 195 million in 2008. Consequently, the firm projects steady growth in the number of ports shipped through to 2008, with revenues remaining flat this year before rising steadily until 2008.

The growth came from an unexpected region last year, noted Infonetics principal analyst Michael Howard. "In the first quarter of 2005, the EMEA and Asia Pacific regions accounted for 75% (almost 13 million) of all ports shipped, but the big surprise came from the CALA region, which jumped an amazing 134% between 4Q04 and 1Q05 to match North America's output of 2 million DSL ports," he said in a statement. "Some major deployments are underway in the population centers on the Andean-Brazilian continent (ABC), explaining the surge in CALA's DSL port shipments. The other 3 world regions followed the usual pattern of a down first quarter, allowing the usually much smaller CALA to reach parity with North America, if only for a quarter."

Alcatel, Huawei, and Siemens lead the worldwide DSL aggregation hardware market. Digital subscriber line access multiplexers (DSLAM) make up 61% of the market, with IP DSLAMs rapidly overtaking asynchronous transfer mode (ATM) units in both ports shipped and revenues.

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