Electronics Production | December 28, 2006
IPTV Emerges as Major Growth Driver for Networking Gear in 2007
The number of subscribers to Internet Protocol Television (IPTV) services worldwide is expected to nearly triple in 2007, helping to drive a strong increase in sales of wired communications equipment and related semiconductors for the year, iSuppli Corp. predicts.
IPTV brings new capabilities to television entertainment, including interactivity, integration with voice and data communications, personalization and value-added services. With the arrival of more competitors in the market, the variety and pricing of IPTV services will improve for consumers, iSuppli predicts. "The year 2007 represents an inflection point for IPTV where the technology will no longer be only for early adopters but those in mass market will also jump on board," said Steve Rago, principal analyst for networking and optical communications at iSuppli. "This IPTV transition is occurring simultaneously around the world, so everywhere regionally will see an increase in subscribers." Global IPTV subscribers will soar to 14.5 million in 2007, up a stunning 192.4 percent from 4.9 million in 2006, iSuppli predicts. By 2010, worldwide IPTV subscribers will amount to 63 million, Rago said. As the number of IPTV subscribers grows, telecommunications companies will spend more on equipment that can increase network bandwidth and capacity. Partly because of the IPTV surge, global factory revenue for wired communications gear will rise to $101.4 billion in 2007, up 7.2 percent from $94.6 billion in 2006. This growth rate is nearly doubl the 3.7 percent expansion in 2006. Moving up another level of the supply chain, semiconductor sales to the wired communications gear market also will benefit from IPTV's ascendance. Global revenue for wired-communications-oriented semiconductors will expand to $19.4 billion in 2007, up 18.3 percent from $16.4 billion in 2006. In comparison, chip revenue to the wired gear market grew by only 10 percent in 2006. Equipment winners in 2007 Because of the expected growth in IPTV subscribers and the telecommunications companies' purchasing of equipment in order to increase their bandwidth and capacity, demand for optical networking equipment is expected to rise dramatically in 2007. Long-haul optical WAN equipment will be the top-performing sector of the global wired communications networking equipment market in 2007, with factory revenue rising to $2.7 billion in 2007, up 40 percent from $1.9 billion in 2006. The impact of IPTV and video on wired network communications gear spending is widespread, with six of the seven top segments of the market receiving a sales boost due to the technology's rise. "The only segments that will not being driven by IPTV and video in 2007 is the LAN switches and hubs area," Rago said. "This broad-based boost will offer copious opportunity for networking gear makers in 2007." Enterprise networking in 2007 The enterprise networking market is being led by the continued growth of the LAN switching segment. iSuppli is forecasting 25 percent growth in 2007 for LAN switching gear, up from 13 percent growth in 2006. Driving this growth is the conversion to Gigabit Ethernet, coupled with strong demand for new enterprise networks in regions outside of North America. The winners in the IPTV supply chain will be those companies that can provide innovative solutions that enable telecommunications companies to achieve their vision of becoming the multimedia service providers of choice to consumers. For those targeting the LAN switch space, iSuppli expects the market leaders of 2006 will continue to dominate in 2007. Newcomers to this market will find it very hard to displace the incumbents.
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