& cplSiteName &

Cisco: 'We Love Set-Top Boxes'

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
2/21/2012
50%
50%

Cisco Systems Inc. (Nasdaq: CSCO) is committed to the set-top box business, and don't let anyone tell you any different.

That was the crux of a message Cisco released Monday as it looks to defuse a rumor that the company is trying to unload its set-top box business. The New York Post reported on Sunday that private equity firms are among the most likely suitors for Cisco's STB business. (See Cisco Puts STB Unit Up for Sale.)

The company told Light Reading Cable that Cisco doesn't "comment on rumors or speculation," but company Director of Corporate Communications John Earnhardt went a step further on Monday afternoon by addressing the speculation in a blog post.

"Let me be as clear as I can: we love set top boxes," Earnhardt wrote.

He backed that up by reminding everyone that Cisco Chairman and CEO John Chambers, on the company's recent second-quarter earnings call, stated: "In terms of set-top boxes, we are very much committed to this marketplace."

"I hope that this clarifies any erroneous, un-sourced comments that might be out there in the marketplace," Earnhard wrote, allowing that Cisco's service provider customers have asked the company to help them migrate from "traditional" set-tops to IP set-top boxes that tie into Cisco's multi-screen Videoscape platform. Cisco, by the way, sold its set-top plant in Juarez, Mexico, to Taiwan-based Foxconn Technology Group last summer as part of a broader cost-cutting effort. (See Foxconn Buys Cisco's Set-Top Factory .)

In some ways, Videoscape does de-emphasize traditional set-top box hardware, because it's increasingly reliant on cloud-based delivery systems and software-based clients that can emulate that functionality in IP-connected TVs, tablets and smartphones. In fact, Cisco's been buying companies to help fill in some technology gaps in the Videoscape platform. (See The Disappearing Set-Top , Cisco to Buy BNI Video for $99M and Cisco's Videoscape Stresses Cloud Control.)

However, the New York Post isn't the only one that's buying into the rumor that something is afoot at its STB division. An industry source familiar with Cisco's plans told Light Reading Cable that it's his understanding that the vendor is "shopping it selectively," but did not say if that interest was for the whole STB division or limited to only its legacy, pre-Videoscape set-top products.

Even if Cisco stays in the set-top box game, the business is less lucrative than it used to be. Among recent examples, sources say Samsung Corp. , which competes with Cisco at key accounts such as Time Warner Cable Inc. (NYSE: TWC), Bright House Networks and Cablevision Systems Corp. (NYSE: CVC), has been particularly aggressive with a pricing strategy that has been causing set-top box margins to shrink. (See Samsung Boxes Break In at Cablevision .)

And that market is becoming increasingly competitive. The world's top set-top maker, Pace plc , for example, has been making strides in the U.S. market, scoring a deal to make a video gateway that will power Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s next-gen "X1" video product. (See Comcast IDs Cloud TV Product as 'X1' and Comcast to Swing Xcalibur Wide in 2012.)

— Jeff Baumgartner, Site Editor, Light Reading Cable

(8)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Jeff Baumgartner
50%
50%
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:42:07 PM
re: Cisco: 'We Love Set-Top Boxes'


True, it can still *love* set-tops even if the company ultimately decides to sell the unit to someone else.  It may love to see someone else deal with that tough part of the SP video business. Also, saying they are committed to the STB market isn't a denial that it's seeking a sale. They'll want to make sure that Videoscape supports all forms of STBs, whether that box is sold and made by Cisco or another vendor of the SP's choosing. JB




 
btierney
50%
50%
btierney,
User Rank: Light Beer
12/5/2012 | 5:42:07 PM
re: Cisco: 'We Love Set-Top Boxes'


Well stated.  While Videoscape is good marketing, I'd like to see a bit more meat on the bone.  The STB business has been a custom one for decades.  Efforts to move it to retail have failed for many reasons such as each Video provider has custom features.


I can't believe Cisco will keep them as they are poor and getting poorer margins.  As a buyer, I still don't quite see any synergy at the street level with San Jose and Lawrenceville.  Alas, a missed opportunity that I'm afraid the window has closed.

DCITDave
50%
50%
DCITDave,
User Rank: Light Beer
12/5/2012 | 5:42:07 PM
re: Cisco: 'We Love Set-Top Boxes'


Usually a sentence that starts like that means that the writer, not the reader, is searching for clarity. Cisco is so silly to address the media reports in a blog after stating its policy is that it does not comment on what it regards as speculation.


If Cisco can so quickly step outside of its own stated policies by attempting to "be clear" about an issue, I'm led to think that the company is likely to be shopping the set-top unit while stating its affinity for set-tops in its corporate blog posts.


To say it loves set-tops is not the same as Cisco saying that the sale of its set-top unit has not been a topic for conversation in meetings. Cisco could tell us as much, but it doesn't comment on speculation.


 


 


 

msilbey
50%
50%
msilbey,
User Rank: Blogger
12/5/2012 | 5:42:06 PM
re: Cisco: 'We Love Set-Top Boxes'


It would be interesting to see Cisco drop its QAM set-top business, but I have a hard time seeing the advantage right now given the gateway movement. Everyone and their mother can create an IP box, but the value of a QAM/IP gateway is significantly higher. Of course, it's a lot of investment too, but Cisco's already put that money in. I can't see why someone new would get into the game now, but I also can't see why the big guys would dump QAM now when there are still years ahead for milking that revenue even as the industry shifts to IP. 

DCITDave
50%
50%
DCITDave,
User Rank: Light Beer
12/5/2012 | 5:42:06 PM
re: Cisco: 'We Love Set-Top Boxes'


Right. The company can simultaneously have two loves. It loves set-tops. And it loves profit margins.


Also, for Videscape to work, a set-top is not needed. Just some hardware somewhere in the home to decode and translate/transmit the signal to an end device or screen.


Right now, the set-top is as good a device as any for that chore. In a little while, I think home networks will be more about having one all-powerful gateway (managed by the service provider) and a plethora of end devices to distribute content. 


A few more years into the future, I wouldn't be surprised to just see wireless broadband baked into all end devices with no home network needed at all to consume cloud-based services.


 

Jeff Baumgartner
50%
50%
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:42:04 PM
re: Cisco: 'We Love Set-Top Boxes'


Yeah, the way it was told to me again today is that they'd be looking to unload the whole STB biz, qam, ip, hybrid, etc.   Plus, I've got some additional detail on the other cable businesses that they got from SA and what they plan to do with that.  anyway, more on that later today. and I agree...who would want a QAM-only STB biz or be willing to pay for a unit that is that limited and clearly on the decline. JB


 




 
Rush21120
50%
50%
Rush21120,
User Rank: Light Sabre
12/5/2012 | 5:42:02 PM
re: Cisco: 'We Love Set-Top Boxes'


SA was about revenue and customers for Cisco.  In fact SA was given lower margin expectations then the other produt familys when I worked for Cisco at the benefit of more customers and revenue.  As revenue and margins fall, it's a business decision held up only by what to replace the revenue with.

Jeff Baumgartner
50%
50%
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:42:01 PM
re: Cisco: 'We Love Set-Top Boxes'


And it sounds like they are being selective on what they are trying to sell. Rather than selling all of what we used to know as SA, they are picking their spots, starting with the STB unit, or what's left from that to actually sell. Still I wonder who would buy it.. the original story suggested private equity... i might suggest Arris as they look to make more hay with STBs/video gateways, but I think they and Cisco are too competitive everywhere else for such a deal to come together, even if it was at a price Arris wouldn't balk at. JB




 
From The Founder
Download our complete guide to de-risking NFV deployment in 2016, including:
  • An eight-step strategy to deploying NFV safely, based on input from the companies that have already started virtualizing their production networks.
  • Interviews with leading executives at Colt, AT&T, Deutsche Telekom, Cisco, Nokia, ZTE, Ericsson and Heavy Reading.
  • Flash Poll
    Live Streaming Video
    Prepping for the Future: Upskill U Explained
    During this short kick-off video, Doug Webster, Vice President of Service Provider Marketing, Cisco, and Light Reading’s CEO & Founder Steve Saunders give an overview of Upskill U.
    LRTV Interviews
    Demand Surges for On-Demand Ads

    5|5|16   |     |   (0) comments


    Ed Knudson, VP, Product and Strategy at Canoe Ventures, discusses the rising appeal of VoD ads and the challenges on inserting ads dynamically in live TV programming.
    LRTV Custom TV
    Exclusive: Video Interview With Sckipio CEO David Baum

    5|5|16   |     |   (0) comments


    At his headquarters in Tel Aviv, G.fast visionary David Baum, CEO of Sckipio, provided an exclusive interview to Light Reading and showed how innovations in rate and reach, vector densities, fast reconnecting times and SFP-based residential gateways are expanding the potential of G.fast.
    Telecom Innovators Video Showcase
    Atrinet's NetACE – Migration to NFV & SDN With NetOps-Driven LSO

    5|4|16   |     |   (0) comments


    At Atrinet's headquarters, Ray Le Maistre sits down with Roy Silon to get an in-depth look into the company's focus and the secret recipe for their success.
    LRTV Huawei Video Resource Center
    Amsterdam ArenA, Powered by Huawei

    5|4|16   |     |   (0) comments


    Huawei's ICT solutions power the state-of-the-art Amsterdam ArenA, turning it into a smart stadium.
    LRTV Interviews
    Testing When There's No 'There' There

    5|4|16   |     |   (1) comment


    The benefits of SDN/NFV are well known, but the transition comes with some challenges, prominent among them is: how do you test a network that has been abstracted and has the potential to be endlessly reconfigurable? Light Reading was at NFV World Congress in Santa Clara, Calif., where we bumped into Mats Nordlund, CEO and co-founder of Netrounds, a Swedish ...
    LRTV Interviews
    Ditching the Slash & the Orchestration Wars

    5|3|16   |     |   (2) comments


    SDN and NFV have been inextricably bound with each other for so long that on a conceptual level, smooshing them together into one catch-all phrase – SDNFV – is now justifiable, according to Dan Pitt, executive director of the Open Networking Foundation (ONF). Light Reading spoke to Pitt at the NFV World Congress, where he explained that the next ...
    LRTV Custom TV
    ZTE TV Connect Highlights

    5|3|16   |     |   (0) comments


    ZTE gives us a tour of its booth and new products at TV Connect in London.
    LRTV Custom TV
    Deluxe's Unified Delivery Solution

    5|3|16   |     |   (0) comments


    Join Alan Breznick of Light Reading and visit the Deluxe booth at NAB! Here you'll find Deluxe's Unified Delivery Solution, OTT video, virtual reality, HDR, 4K and much more!
    LRTV Interviews
    Verizon Puts Gray Boxes in the Shade

    5|2|16   |   04:33   |   (1) comment


    When it comes to the white box trend, "gray" boxes, which have a slight proprietary twist, don't give service providers and end users the advantages they're seeking, according to Verizon's Vice President of Product and New Business Innovation Shawn Hakl.
    LRTV Custom TV
    Dealing With a Disrupted Video Market

    5|2|16   |     |   (0) comments


    Ericsson's Simon Frost discusses how traditional pay-TV providers can cope with the big changes wrought by the rise of OTT video and IP technology.
    LRTV Custom TV
    The VNF Responsibility of Red Hat

    5|2|16   |     |   (0) comments


    At MWC, Caroline Chappell of Heavy Reading visits the Red Hat booth and sits down with Chris Wright to talk about the responsibility the VNF needs to take on in order to ensure the operators get the carrier-grade performance they expect for their network.
    LRTV Interviews
    AT&T Expert on the Key Pillars of UC

    4|29|16   |   03:58   |   (0) comments


    Vishy Gopalakrishnan, AVP of product marketing at AT&T, talks about the three developments that are making unified communications and collaboration secure and reliable for enterprise users.
    Upcoming Live Events
    May 23, 2016, Austin, TX
    May 23, 2016, Austin Convention Center
    May 24-25, 2016, Austin Convention Center, Austin, TX
    September 13-14, 2016, The Curtis Hotel, Denver, CO
    December 6-8, 2016,
    June 16-18, 2017, Austin Convention Center, Austin, TX
    All Upcoming Live Events
    Infographics
    A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
    Hot Topics
    WiCipedia: Woman Cards & Bitch Switches
    Sarah Thomas, Director, Women in Comms, 4/29/2016
    Sprint CEO: Our Spectrum Is for 5G
    Dan Jones, Mobile Editor, 5/3/2016
    Amazon & Other 'Big 4' Cloud Providers Crushing Competitors
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/29/2016
    Rovi Reels in TiVo for $1.1B
    Mari Silbey, Senior Editor, Cable/Video, 4/29/2016
    Showdown at the OpenStack Corral
    Carol Wilson, Editor-at-large, 5/3/2016
    Like Us on Facebook
    Twitter Feed
    BETWEEN THE CEOs - Executive Interviews
    In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
    Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
    Animals with Phones
    Sloth Mail Click Here
    Sloth mail -- somehow even slower than snail mail.
    Live Digital Audio

    Of all the tech companies in the Valley, Intel has made the most aggressive commitment to building a diverse and inclusive workplace culture. It's doing so by taking concrete, measurable steps, making a large financial investment and through a commitment to complete transparency about its progress. In this radio show, WiC Director Sarah Thomas will be joined by Shlomit Weiss, Intel's Vice President, Data Center Group, and General Manager of Networking Engineering, who will share with us why Intel is tackling this huge challenge, how and to what effect. She will also discuss her unique experiences leading development of Client SOC development in the past and today leading development of all of the chipmaker's silicon hardware for networking IPs and discrete devices and managing a team of 600 engineers across Israel, Europe and the US.