& 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
The independent evaluation of Nokia's key virtual network functions (VNFs) was a defining moment for the Finnish giant.
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 Documentaries
Leading Lights 2016 Highlights

5|25|16   |   02:26   |   (1) comment


Some of the high points from this year's Leading Lights awards dinner at the Hotel Ella in Austin, Texas.
LRTV Documentaries
Light Reading Hall of Fame 2016

5|23|16   |   05:43   |   (0) comments


Find out who has been welcomed into Light Reading's Hall of Fame this year.
LRTV Custom TV
ZTE TM Forum Highlights

5|23|16   |     |   (0) comments


ZTE showcased its new ICT solutions at TM Forum in Nice.
LRTV Interviews
Gamma's MD on the Emergence of UC2

5|20|16   |     |   (0) comments


Gamma Communications Managing Director David Macfarlane believes the unified communications (UC) market has reached a tipping point.
LRTV Custom TV
The Ultimate 5-Minute Guide to Digital Customer Engagement

5|20|16   |     |   (0) comments


In this short video, you will hear all about how Digital Customer Engagement is the key to meeting customer expectations, keeping them happy, and maximizing revenue. VP Product & Marketing at Pontis, Ofer Razon, breaks down for us the five essential capabilities for successful Digital Customer Engagement. Don’t miss!
LRTV Custom TV
NFV in 2016: Part 1 – NFV Use Cases Get Real

5|19|16   |   05:57   |   (0) comments


Consensus is building around the key use cases for NFV, including managed IP services at the network edge and on customer premises, which can generate new revenues from enterprises/SMBs and consumers; Evolved Packet Core to support LTE migration; and adjacent technologies, such as TAS and IMS, to support VoLTE and next-generation charging and policy control ...
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 3

5|19|16   |     |   (0) comments


Steve Vogelsang discusses the challenges of operational transformation and how Nokia helps its customers. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Level 3: Why UC Is In Demand

5|17|16   |   04:12   |   (1) comment


Andrew Edison, Level 3's senior VP of sales, EMEA region, talks about the drivers of growth in the unified communications services market.
LRTV Custom TV
ARM's OPNFV Action

5|17|16   |     |   (0) comments


At the ARM booth at MWC 2016, Joe Kidder and Bob Monkman speak to Light Reading about OPNFV and their upcoming action.
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 2

5|16|16   |     |   (0) comments


Steve Vogelsang gives advice to service providers on how to move to NFV. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Interoute CTO on NFV's Maturity

5|13|16   |   06:46   |   (1) comment


Matt Finnie, CTO at international operator Interoute, explains how NFV has made life easier in terms of logistics and how Interoute can now enable a 'software-defined moment' for its customers.
LRTV Huawei Video Resource Center
UBBS 2016 Highlights

5|12|16   |     |   (0) comments


Highlights of Huawei's UBBS event in Hong Kong.
Upcoming Live Events
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
DT: Telcos Must Escape Vendor Prison
Iain Morris, News Editor, 5/24/2016
AT&T to Start 5G 'Friendly' Trial by 2016 End
Dan Jones, Mobile Editor, 5/24/2016
WiCipedia: Short Skirts & Back-Up Plans
Eryn Leavens, Special Features & Copy Editor, 5/20/2016
Eurobites: Be More European, EU Tells Streaming Services
Paul Rainford, Assistant Editor, Europe, 5/20/2016
AT&T's Margaret Chiosi Retires
Ray Le Maistre, Editor-in-chief, 5/25/2016
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
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.