Light Reading

MSOs Slash Hardware Spending Again

Alan Breznick
8/30/2013
50%
50%

In another down quarter for cable equipment vendors, shipment revenues for new edge QAM and cable modem termination system (CMTS) devices plunged in the spring, particularly in North America, according to the latest data from Infonetics Research.

In its new survey, Infonetics Research Inc. found that edge QAM and CMTS revenue in the critical North American market fell 27 percent in the second quarter from the same period a year earlier. The big drop in spending follows a decrease in the first quarter as well.

Edge QAM and CTMS revenue fell globally as well during the second quarter, but not nearly as much as in North America. Infonetics says worldwide equipment revenues slipped to $313 million in the spring, down 4 percent from the year-ago period and the second straight quarterly decline as well.

Jeff Heynen, principal analyst for broadband access and pay TV at Infonetics, blames the large North American revenue falloff on the "turnup" of a large number of software licenses by US and Canadian cable operators. MSOs use these software licenses to upgrade gear that they have already installed in their cable systems. But, while they pay for these licenses when they carry out the upgrades, they don't shell out as much per port for software as when they buy new equipment.

As a result, North American port pricing fell about 15 percent in the quarter even as cable operators boosted their capacity to offer new broadband and video services, Heynen says. In turn, overall revenue fell as well.

"Once again, the cable broadband market aggregation market is a tale of opposing trends," he adds. Namely, there was "increasing channel capacity to support DOCSIS 3.0, multiscreen, and OTT video, and decreasing price-per-channel."

With the first cable operators now starting to deploy next-gen Converged Cable Access Platform (CCAP) equipment in their systems, Heynen says CCAP is starting to have an impact on the cable broadband hardware market. He noted, though, that most MSOs are initially using the new CCAP gear "as nothing more than dense CMTS and edge QAM platforms," not as integrated devices for processing both data and video channels in the cable headend.

Heynen predicts that the growing CCAP deployments will cause further pricing erosion in 2014 and 2015. But he argues that overall revenues will still rise because channel volumes will soar even more. In fact, Infometics' latest forecast calls for global revenues to rise to $2 billion by 2017, up from about $1.3 billion this year.

"2013 will be the nadir of recent and future years," he said. "But good times lay ahead as channel volumes across the board should more than offset the continued ASP [average sales price] erosion."

Looking at the latest quarterly vendor rankings, Cisco Systems Inc. (Nasdaq: CSCO) retained its CMTS market edge over Arris Group Inc. (Nasdaq: ARRS) in the spring. Cisco, which had dropped to second place in the rankings last fall, took home 51 percent of the CMTS revenues for the second straight quarter, according to Infonetics. Arris finished a strong second place with a 42 percent revenue share, thanks in part to its acquisition of Motorola Home in April. Casa Systems Inc. moved up to an 8 percent share, thanks in large part to its head start in the still-emerging CCAP market.

On the edge QAM side, Cisco came out ahead with a 32 percent market share, edging out Harmonic Inc. (Nasdaq: HLIT) and Arris.

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

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
albreznick
50%
50%
albreznick,
User Rank: Blogger
8/30/2013 | 2:37:58 PM
Impact of CCAP
OK. To me, the big questions here are what kind of impact CCAP will have on the cable broadband equipment market and how soon that impact will be greatly felt. We're also still waiting to see what Harmonic, CommScope and other possible candidates will do in the CCAP vendor space. We'll entertain any and all predictions here. 
Flash Poll
From The Founder
Network architects aiming to upgrade their networks to support agile, open, virtualized services in the 21st century need to consider new criteria when choosing between technology suppliers.
Live Streaming Video
BTE 2015 Sponsor Keynote: HP
Dr. Prodip Sen, CTO, Network Functions Virtualization, HP
LRTV Documentaries
IoT in Action

6|30|15   |   1:39   |   (2) comments


Two co-workers discuss the benefits of IoT technology.
LRTV Interviews
Ericsson Opens Up on OPNFV

6|30|15   |   14:16   |   (0) comments


Martin Bäckström, VP and head of industry area Datacom at Ericsson, talks to Light Reading founder and CEO Steve Saunders about the emergence of OPNFV, the importance of standards and Ericsson's OPNFV plans.
LRTV Custom TV
NetNumber Founder Discusses NFV/SDN Impact on SP Networks

6|26|15   |   4:15   |   (0) comments


NetNumber Founder Doug Ranalli examines why SPs need a new network infrastructure for service agility. While NFV and SDN are the tools, the old ways of thinking about signaling control are inhibitors. Doug provides his recommendations.
LRTV Custom TV
Orchestrating NFV vCPE Services Across Multivendor Networks

6|26|15   |   5:46   |   (0) comments


Nirav Modi provides an overview of vCPE, the fastest-growing NFV use case, showing how Cyan's Blue Planet orchestrates vCPE services across a multivendor infrastructure to rapidly deliver new managed services for business customers.
LRTV Custom TV
ZTE at LTE Summit Amsterdam 2015

6|26|15   |     |   (0) comments


As one of the leading global telecommunications providers, ZTE presented its cutting-edge technology at LTE World Summit 2015 in Amsterdam. On display at ZTE's booth were the latest R&D achievements in wireless, 5G development, HetNet, deep convergence of FDD and TDD, and RCS/IMD/iSDN/vCN.
LRTV Documentaries
OPNFV Director Opens Up on Women in Tech

6|25|15   |   3:25   |   (0) comments


Heather Kirksey, the director of the OPNFV, gets real about the gender disparity in open source and standards and discusses how we can change both the conversation and the gender dynamics.
LRTV Custom TV
Symantec's Service Provider Security Strategy

6|24|15   |   7:06   |   (0) comments


Didi Dayton explores Symantec's emerging enterprise security strategies for service providers. Highlights include 'killing the password,' self-defense, advanced analytics and adaptive response in a service provider architecture.
Between the CEOs
Debating Network Evolution With Cisco's Cedrik Neike

6|23|15   |   12:54   |   (2) comments


Cedrik Neike, SVP of Global Service Provider, Service Delivery, at Cisco, talks to Light Reading founder and CEO Steve Saunders about solving service provider customer problems in a virtualized, DevOps world, including multivendor support and the future of network procurement.
LRTV Documentaries
Vodafone: What's Good for Moms Is Good for Business

6|23|15   |   3:04   |   (3) comments


Megan Doberneck, the general counsel for Vodafone Americas, discusses her company's progressive maternity policy, explains why promoting women in tech is good business and offers some some good advice for any women in the industry.
LRTV Interviews
NFV: Ready for Prime Time

6|23|15   |   05:09   |   (1) comment


At BTE 2015, Vip mobile CTO Dejan Kastelic talks about how NFV is ready for the real world and how Telekom Austria is introducing centralized resources for its group operations.
LRTV Documentaries
Tykes Talk Tech

6|22|15   |   02:30   |   (9) comments


What does optical fiber look like? When will 5G arrive? What's the WiFi password at Ikea? Light Reading sat down with three 8-year-olds to answer some of the communications industry's most burning questions...
LRTV Huawei Video Resource Center
Huawei Partners With TDC for World's First Early DOCSIS 3.1 Field Test

6|22|15   |   3:06   |   (0) comments


In a move to enhance user experience, Denmark's TDC aims to become an early adopter of DOCSIS 3.1. In partnership with Huawei, TDC recently ran the world's first field tests on its coax network that reached speeds nearing 1 Gbit/s.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, The Westin Peachtree Plaza, Atlanta, GA
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
All Upcoming Live Events
Infographics
Hot Topics
Staying Productive With My Office-in-a-Bag
Mitch Wagner, West Coast Bureau Chief, Light Reading, 6/25/2015
WiFi Calling Catches on Globally
Sarah Thomas, Editorial Operations Director, 6/23/2015
Who's Feeding Fiber to LinkNYC Hotspots?
Mari Silbey, Senior Editor, Cable/Video, 6/29/2015
Verizon Closes AOL, Hints at Summer Launch
Mari Silbey, Senior Editor, Cable/Video, 6/23/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Casa Systems has been going from strength to strength over the last couple of years. In 2013, it became the first vendor to ship an integrated CCAP device -- the ...
Cedrik Neike, SVP of Global Service Provider, Service Delivery, at Cisco, talks to Light Reading founder and CEO Steve Saunders about solving service provider customer problems in a virtualized, DevOps world, including multivendor support and the future of network procurement.
Cats with Phones