SONET/SDH and ATM Segments Will Lead WAN ASSP Market to $3.3 Billion in 2003, IDC Says

FRAMINGHAM, MA – MARCH 27, 2000 – These are good times for the wide area network application-specific standard product (WAN ASSP) space. Worldwide revenues topped $1.4 billion in 1999, and they will increase at a compound annual growth rate (CAGR) of 23% through 2003, when they will approach $3.3 billion. While the T/E segment of the market is currently the largest, it will experience the slowest growth, and by 2003 both the asynchronous transfer mode (ATM) and SONET/SDH segments will be larger. This data comes from a new IDC report, Worldwide WAN ASSP Market Review and Forecast, 1997-2003.

"Asynchronous transfer mode has gained acceptance in the wide area network as ATM services increase and low- to medium-capacity ATM access appears," said Kimberly Funasaki, an analyst with IDC's Semiconductors research program. "Synchronous optical network/synchronous digital hierarchy has emerged as a key backbone transmission technology capable of carrying various higher-level protocols, including ATM. Together these two technologies are changing the network backbone."

According to IDC, SONET/SDH will grow the fastest at a CAGR of 29%, bringing revenues in this segment from less than $500 million in 1999 to over $1 billion in 2003. "There are a number of foreseeable opportunities in this marketplace," Funasaki said. "First, there are opportunities for channelized SONET/SDH physical layer chips (PHYs). Second, there are opportunities for OC-12 and OC-48 parts for dense wave division multiplexing (DWDM) in the metropolitan-area network. And third, there are opportunities for higher line rates of OC-192 and now even OC-768 parts for DWDM systems in long-haul networks."

At 26%, ATM's CAGR will be right behind that of SONET/SDH. ATM ASSP revenues will jump from $420 million in 1999 to approximately $1 billion in 2003. Within the ATM ASSP market, the 622Mbps segment will increase the fastest with a CAGR of almost 32% and will become the largest segment this year, overtaking the 155Mbps segment. The 2.5Gbps segment, meanwhile, will start to gather momentum this year, and by 2003 it will total more than $10 million.

Revenues in the T/E ASSP market will increase at a CAGR of 14% from over $500 million in 1999 to over $900 million in 2003. The T3/E3 segment, however, will grow more than twice as fast as the overall segment, and by 2003, its revenues will exceed $200 million.

Overall, IDC expects continued moderate to strong growth in all segments of the WAN ASSP market for several years to come.

"Growth of data traffic will facilitate growth of ATM and SONET/SDH, and traditional T/E will adapt to add features that also support these technologies," Funasaki said.

IDC's new report, Worldwide WAN ASSP Market Review and Forecast, 1997-2003 (IDC #B21587), examines major developments in the WAN silicon space and discusses the future of ATM, SONET/SDH, and T/E technologies. The report forecasts worldwide WAN, ATM, SONET/SDH, and T/E ASSP revenue by technology through 2003. The market for physical-layer controllers, segmentation and reassembly chips, and switch-fabric ICs is also discussed. To order a copy of the report, contact Patrick Steeves at 1-800-343-4952, ext. 6787 or at psteeves@idc.com.

About IDC

IDC delivers dependable, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and technology trends and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of International Data Group, the world's leading IT media, research, and exposition company.

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