This is the time of the year when market research firm, Infonetics Research (News - Alert), goes through a whole series of first quarter analysis to try and determine how various markets have fared so far and what we can expect to see. This report takes a look at how the microwave equipment market did first quarter 2014 and it is not looking good.

According to Infonetics latest quarterly report which is simply entitled “Microwave Equipment” report, the market for microwave equipment, including time-division multiplexing (TDM), Ethernet and dual Ethernet-TDM microwave equipment, registered a loss in the first quarter 2014. One of the main factors seems to be pricing pressures and competition from alternative network technologies, particularly fiber-based backhaul solutions. All of these influences have added to constrained growth in the microwave market.

The report’s author, Richard Webb, who is Infonetics’ directing analyst for mobile backhaul and small cells, said “The proliferation of LTE (News - Alert)-A upgrades and small cells deployments was not enough to stop the microwave equipment market from sliding downward in the first quarter of 2014. The seasonal decline was much more severe than usual, suggesting a deeper malaise in the market.”

As you can see from some of the highlights of the report, just about every product that involves the microwave market suffered;

• Microwave equipment revenue totaled $1 billion worldwide in Q1 2014, down 17 percent sequentially and down seven percent from the year-ago quarter
• Revenue for every microwave product segment-TDM, dual Ethernet/TDM, Ethernet, access, backhaul, transport-declined in Q1 2014 from Q4 2013
• Backhaul continues to dominate the microwave market, while access and transport remain stable niche segments
• Ericsson held steady atop the microwave equipment revenue share leader board in Q1 2014, while NEC leapfrogged Huawei (News - Alert) to claim the number two spot
• By 2018, the average revenue per unit (ARPU) for Ethernet-only microwave gear is anticipated to fall to around half its 2013 value.

As you can see from the second to last highlighted item, while the overall market has been on a bit of a down slide, companies like Ericsson (News - Alert), Huawei and especially NEC have not felt the decline.

Webb also commented on the fact that if it is not already there, microwave backhaul may be at the limit of demand. This is realized through the increase in backhaul capacity from cell sites, this is also true regardless of the introduction of wireless 5G broadband towards 2018.