& cplSiteName &

Harmonic Grabs CCAP Ring

Alan Breznick

Seeking to play a big role in the emerging market for converged cable access platform (CCAP) gear, Harmonic has snagged its first big MSO equipment order, and it expects to land many more in the next couple of years.

Despite its relatively late start in the market, Patrick Harshman, president and CEO of Harmonic Inc. (Nasdaq: HLIT), laid out this optimistic view of his company's CCAP prospects in its third-quarter earnings call late Monday. He said Harmonic is gearing up to capture significant share of what could be a $2 billion annual market before the end of the decade.

"We're making good progress," Harshman said. "We don't underestimate the challenges" in the CCAP market, but "we're increasingly confident of our ability to be a player and ultimately a category leader."

During the earnings call, Harmonic reported that it had landed its "first multimillion-dollar order" for NSG Pro, a dense, supercharged edge QAM modulator designed to become a full-fledged CCAP device with full cable modem termination system functionality over the next 12-18 months. Harshman said the vendor is conducting "integrated testing with a large North American customer," which he would not name, for commercial deployment of NSG Pro.

One good guess would be that the mystery MSO is Comcast Corp. (Nasdaq: CMCSA, CMCSK), which has been the first one out of the gate with CCAP trials and deployments. Comcast also happens to be Harmonic's biggest customer, accounting for 15 percent of its revenue in the third quarter, versus 11 percent in the second quarter. No other customer produces as much as 10 percent of Harmonic's revenue.

Though vendors such as Arris Group Inc. (Nasdaq: ARRS) and Casa Systems Inc. have already announced CCAP chassis orders from MSOs such as Comcast and Time Warner Cable Inc. (NYSE: TWC), and Cisco Systems Inc. (Nasdaq: CSCO) has already conducted trials with Cox Communications Inc. , Harshman said he's not concerned about entering the market later. He argued that the CCAP market is in the early throes and is still evolving quickly, and that the five major vendors do not have a full-fledged solution available yet.

"There isn't a 100 percent CCAP-compatible product out there," he said in response to analysts' questions. "With real CCAP yet to come, we think we're as well positioned as anyone for the medium to long term."

However, Harmonic officials conceded that its gross profit margins will take a hit on the first CCAP orders shipped to cable customers. CFO Carolyn Aver said the "first batch of units" will generate "much lower margins" as the company gears up production of the devices.

That admission caused Raymond James analyst Simon Leopold to express concern about Harmonic's earnings potential. In a note issued to clients Tuesday, he argued that the gross margin hit "suggests very aggressive pricing" for the initial units. That strategy makes sense, but it indicates that "the competitive landscape for the next generation of cable network equipment will be challenging."

Despite registering slightly better-than-expected results for the third quarter, Harmonic officials fueled that concern further with their financial guidance for the fourth quarter. The company, which produced $122.9 million over the summer months, projects that it will generate $115 million to $125 million of revenue for the fourth quarter, versus analysts' projections of $127 million to $128 million.

In addition to focusing on the developing CCAP market, Harmonic is counting on help from next-generation video compression technology. Harshman said it sees promise in the new High-Efficiency Video Coding (HEVC) standard and for ultra-HD video and some new improvements to the legacy MPEG-2 and MPEG-4 standards. "We're in a number of pretty interesting conversations about work to upgrade MPEG-2 and MPEG-4 before HEVC. There are a lot of MPEG-2 and MPEG-4 boxes out there."

Related posts:

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
User Rank: Blogger
10/29/2013 | 10:23:31 PM
CommScope's turn next
OK. So now we've heard from 4 of the 5 major CCAP vendors about their trials or actual deployments and orders. The only one left is CommScope, which just unveiled its CCAP-enabled chassis at SCTE in Atlanta last week. So now we wait with bated breath for ComScope's first trials, deployments or orders. Think we'll hear something soon?  
Educational Resources
sponsor supplied content
Educational Resources Archive
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
Wednesday, October 26, 1:00PM EDT
Security: Tackling DDoS
Gary Sockrider, Principal Security Technologist, Arbor Networks
Friday, October 28, 1:00PM EDT
Security: The Plusses and Minuses of Open Source Software
Nick Feamster, Acting Director, Center for Information Technology Policy, Princeton University
Wednesday, November 16, 1:00PM EST
SDN 101
John Isch, Practice Director, Network & Voice, Orange Business Services
Friday, November 18, 1:00PM EST
SDN & Open Source
Christopher W. Rice, Senior Vice President of AT&T Labs, Domain 2.0 Architecture and Design
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
Next-Generation Technology Beyond DOCSIS 3.1

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Liu Jianhua speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Hybrid Video Solutions to Change TV, Change Future

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Ian Locke speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Huawei Future-Oriented Giga Coax Network

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Allen Wang speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Huawei at SCTE 2016

10|20|16   |     |   (0) comments

Join Alan Breznick of Light Reading and take a sneak peek at the Huawei booth at SCTE 2016.
LRTV Custom TV
Assuring Network Quality in a Rapidly Changing Environment

10|20|16   |     |   (0) comments

As the rate of change and complexity increases in agile networks, the importance of introducing DevOps methodologies for integrating active test and assurance solutions throughout the full service lifecycle becomes critical to ensure that customers are experiencing the service quality they demand. The industry landscape is changing, and software-based test and ...
Telecom Innovators Video Showcase
A10 Networks on Service Providers' Industry Needs

10|20|16   |     |   (0) comments

Light Reading's Steve Saunders hears how A10 enables service providers to accelerate, secure and optimize their application delivery to drive down costs, enhance service availability, and better respond to customer requirements, so they can improve customer satisfaction, monetize their network, and grow revenues.
LRTV Custom TV
New NFV Use Cases for Cable TV

10|19|16   |     |   (0) comments

A large number of NFV use cases are focused on the enterprise domain, looking at virtualization of customer-premises equipment (CPE). To date, there has been little focus on the use cases and business case for virtualization of the video content delivery networks required to deliver unicast and streaming video to consumers. Amdocs commissioned Analysys Mason to ...
Women in Comms Introduction Videos
Meet the Future Workforce: New Faces, Expectations & Motivations

10|19|16   |   5:33   |   (1) comment

Millennials and their younger peers, Gen Z, expect more out of their network and more out of their work. Intel's Lynn Comp shares how the industry can prepare for this new generation of workers.
LRTV Custom TV
ZTE Global Services User Congress 2016 Highlights

10|19|16   |     |   (0) comments

ZTE held its 2nd Global Service User Conference in Dusseldorf on October 13-14. Representatives from network operators, leading industry analysts and ZTE senior expertsattended the event, exploring the best practice in managed services and the vision to transform network operations into the operations center of the future (OpCF) in the software-defined networking ...
LRTV Custom TV
Cliff Grossner on Cloud & Network Synergy From Carrier Service

10|18|16   |     |   (0) comments

Local carriers offer the collaborated cloud and network service that benefits from their understanding of the regulations operating in different vertical markets.
In this interview, Cliff Grossner from IHS Technology talks about how this advanced service can support business agility and flexibility.
LRTV Custom TV
VeEX: Live from SCTE Cable-Tec Expo 2016

10|17|16   |     |   (0) comments

Cyrille Morelle, VeEX's President and CEO, talks with Light Reading's Alan Breznick live from the SCTE Cable-Tec Expo 2016. They discuss DOCSIS 3.1 technology, deployments and early lessons learned. New products on display include the CX350s-D3.1, CX380s-D3.1, CX310, AT2500-3G, FX150 OTDR and MTT WiFI Air Expert.
LRTV Custom TV
Smith Micro's Carrier-Grade WiFi Component

10|17|16   |     |   (0) comments

Join Carol Wilson of Light Reading as she interviews the CTO of Smith Micro, Dave Sperling.
Upcoming Live Events
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Hot Topics
Attacks Have Major Internet Sites on the Ropes
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 10/21/2016
Verizon Wants More Data on Yahoo Breach
Alan Breznick, Cable/Video Practice Leader, Light Reading, 10/20/2016
WiCipedia: Grace Hopper Promotes Diversity, Girl Scouts Code & How to Thrive
Eryn Leavens, Special Features & Copy Editor, 10/21/2016
Layer3 TV Comes to Town, Hints at Future
Mari Silbey, Senior Editor, Cable/Video, 10/21/2016
Telecom Italia Plots Digital 'Overlay,' Not Transformation
Iain Morris, News Editor, 10/17/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
Animals with Phones
Live Digital Audio

A vital part of increasing the number of women in comms is transforming the ways companies can support and empower women. While progressive company policies that support both men and women in achieving work-life balance are a step in the right direction, creating a company culture that supports those policies can at times be more challenging.

During this show, we'll talk to Lynn Comp, Senior Director of Industry and Sales Enabling (ISE) in the Network Platforms Group at Intel, about why those challenges exist and how companies can overcome them. She'll provide insight into how Intel has worked to create a culture that supports work-life balance, and provide steps and guidance for other companies wishing to do the same. We will also leave plenty of time to get your questions answered live on the air.