& 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
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
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 Interviews
CenturyLink: Are We All Security Service Providers Now?

5|29|17   |   3:40   |   (2) comments


As the security environment gets more threatening, in the wake of WannaCry and other attacks, service providers need to shoulder more responsibility for securing networks, says Tim Kelleher, vice president for IT security services at CenturyLink, in an interview at the Light Reading Big Communications ...
LRTV Interviews
Verizon: Service Providers' Futures Rest on Software

5|29|17   |   4:22   |   (0) comments


If SPs want to avoid being dumb pipes, they'll have to dive deep into software and rethink the centralized cloud, Verizon's Ed Chan says. Find more Big Communications Event coverage here.
LRTV Documentaries
Verizon's Ed Chan on the New World for Networks

5|29|17   |   19:08   |   (0) comments


In this 2017 Big Communications Event keynote, Ed Chan, senior vice president of Technology, Strategy and Planning for Corporate Networking and Technology at Verizon, discusses the coming world of sensors and the smart edge, powered by new spectrum and faster fiber uploads. For more BCE coverage and videos,
LRTV Interviews
Zayo's CTO: Respect the Infrastructure!

5|29|17   |   3:04   |   (0) comments


At Light Reading's Big Communications Event in Austin, Texas, Zayo's CTO Jack Waters talked about infrastructure and the changing customer landscape for network providers. While everyone else is chatting up applications and services, Waters urges the industry not to downplay the role that ...
LRTV Interviews
AT&T: Creating Dynamic Networks to Meet Business Needs

5|26|17   |   4:24   |   (1) comment


As enterprises need more dynamic networks, service providers need to deliver on-demand, virtual services to meet those needs. AT&T is creating a networking fabric to mix-and-match SDN technologies for enterprise customers, says Roman Pacewicz, AT&T senior vice president for offer management and service integration, in an interview at Light Reading's
LRTV Interviews
EdgeConneX on Industry Headwinds & Tailwinds

5|26|17   |   2:41   |   (0) comments


At Light Reading's Big Communications Event 2017, EdgeConneX CTO Don MacNeil discussed the value of partnerships in the digital world.
LRTV Documentaries
4 Steps Toward a Higher Network IQ

5|26|17   |     |   (0) comments


At the Big Communications Event in Austin, Texas, EXFO CEO Philippe Morin explains how sensors and analytics can boost a network's intelligence and enable on-demand customer experiences. Find more BCE 2017 coverage here.
LRTV Interviews
BT's McRae Sheds Light on 4K Strategy

5|25|17   |   4:45   |   (0) comments


At Light Reading's Big Communications Event 2017 in Austin, Texas, BT Group's Chief Network Architect Neil McRae talks about what it took for BT to broadcast live sports in 4K. Catch up with all our BCE coverage at http://www.lightreading.com/bce.asp.
From the Founder
How the NIA Aims to Advance NFV

5|25|17   |   08:07   |   (1) comment


Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
LRTV Custom TV
Better Solutions That Address Growing Scale

5|25|17   |     |   (0) comments


For Comcast, the X1 rollout and 17-fold increases in broadband speeds in the past 16 years are among factors driving the need for Energy 2020 solutions that reduce cost and consumption, says Mark Hess.
LRTV Custom TV
Ethernity Network Delivers Instant Offloading of Network Functions With All-Programmable Intelligent NIC

5|25|17   |     |   (0) comments


David Levi, CEO of Ethernity Networks, explains that programmability of the hardware makes the company's All-Programmable Intelligent NIC uniquely beneficial for communications service providers that need advanced data appliances with agile support of virtualization. Utilizing the company's patented network processing technology, Ethernity offers data path ...
LRTV Documentaries
BCE 2017: Vodafone Gets Obsessed With Cloud-Native

5|25|17   |     |   (0) comments


Vodafone's Matt Beal updates us on Project Ocean and explains why simple virtualization isn't enough of a goal for network transformation. Catch up with other BCE 2017 keynotes and news at http://www.lightreading.com/bce.asp.
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Cities Clamor for More Clout at FCC
Mari Silbey, Senior Editor, Cable/Video, 5/23/2017
Sonus & Genband Finally Combine to Form $745M Company
Dan Jones, Mobile Editor, 5/23/2017
NB-IoT? Not at Those Prices, Say DT Customers
Iain Morris, News Editor, 5/26/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
Animals with Phones
What Brogrammers Look Like to the Rest of Us Click Here
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.