Light Reading

Cable Modem Shipments Growing Strong

Alan Breznick

Combined worldwide shipments of cable data and voice modems climbed above the 8 million-unit mark again in the third quarter, as MSO demand remained robust for both types of devices.

In the latest compilation of figures by Heavy Reading, the leading cable equipment manufacturers shipped nearly 8.2 million Docsis cable modems, embedded multimedia terminal adapters (E-MTAs), and integrated gateways during the July-to-September 2007 quarter. That represents a 10.5 percent jump from the nearly 7.4 million Docsis devices that were shipped during the corresponding period of 2006.

Not too surprisingly, E-MTAs, which combine cable data modems with PacketCable IP phone adapters, led the way upwards again, as cable operators continued to ramp up their rollouts of VOIP services. Global voice modem shipments rose to nearly 3.7 million units in the summer quarter, up 18.3 percent from the year-ago period.

Thanks to this strong increase, E-MTAs accounted for a hefty 44.8 percent of all Docsis device shipments by the top cable technology vendors in the quarter. That's up a touch from 42 percent in the year-ago period.

But surprisingly, data-only modems held their own once more in the third quarter, despite the soaring demand for integrated data-and-voice service. Shipments of the more traditional cable modems climbed to more than 4.4 million units, up 3.9 percent from the summer of 2006, thanks largely to a strong performance by Motorola Inc. (NYSE: MOT).

Arris sets E-MTA record
Arris Group Inc. (Nasdaq: ARRS), which has ruled the rapidly growing E-MTA sector since 2005, widened its already sizeable edge over previous category leader Motorola as it easily set a new quarterly high for voice modem shipments. For the first time, Arris reported shipping close to 2 million E-MTAs worldwide, up about 50 percent from a year ago. As a result, it captured an impressive 53.8 percent of the worldwide market, up from 42.5 percent a year ago.

Motorola kept its hold on second place in the worldwide E-MTA rankings despite lower unit shipments in the third quarter. Motorola shipped 719,000 voice modems in the period, down 10.1 percent from the same quarter of 2006. Due to this decrease and Arris's sharp increase, Motorola's market share sank to just 19.8 percent, well down from 25.9 percent a year ago.

Like Motorola, the Scientific Atlanta subsidiary of Cisco Systems Inc. (Nasdaq: CSCO) suffered slumping E-MTA shipments in the summer quarter. Scientific Atlanta shipped 528,148 voice modems in the quarter, down 21.5 percent from a year ago. Accordingly, its market share plunged to 14.4 percent, down from 21.8 percent in summer 2006.

Table 1: Top E-MTA Suppliers in 3Q07

Vendor E-MTAs Market Share
Scientific Atlanta
Source: Company reports, Heavy Reading estimates

Moto motors along on data front
Even with the continuing growth of E-MTAs, purely data modems still accounted for more than 55 percent of the category total. Motorola continued to rule the roost here, shipping more than 1.9 million data-only devices, up 28.5 percent from the prior year. With a market share of 43.4 percent, Motorola shipped nearly twice as many modems as any other vendor.

Scientific Atlanta maintained its strong hold on second place despite a slight year-over-year drop in modem shipments. The Cisco subsidiary shipped close to 1 million data devices in the third quarter, down a slight 2 percent from the summer of 2006. As a result, its market share slipped to 23.4 percent.

Similar to Scientific Atlanta, Ambit Microsystems Corp. held onto third place despite a relatively small decline in modem shipments. Ambit shipped more than 600,000 data devices in the third quarter, down 7.8 percent from its year-ago totals. Accordingly, its market share slid to 14.3 percent.

Table 2: Top Cable Modem Suppliers in 3Q07
Vendor Cable Modems Market Share
Scientific Atlanta
Source: Company reports, Heavy Reading estimates

Moto still takes Docsis crown
Despite Arris's growing domination of the E-MTA market, Motorola clung to its lead in the overall Docsis device business globally, thanks mainly to its continued domination of the data-only modem business. Overall, Motorola shipped more than 2.6 million Docsis devices in the quarter, up 15.1 percent from the year-ago period. As a result, it maintained a leading 32.4 percent market share, up slightly from 31.2 percent last year.

Riding the wave of its E-MTA success, Arris came in a strong second place in the overall vendor rankings, widening its edge over the slumping Scientific Atlanta. Arris shipped a total of almost 2.1 million data and voice modems in the third quarter, up 45.8 percent from the summer of 2006. Thanks to this surge, Arris's global market share climbed to 25.4 percent, up from 19.3 percent last year.

Scientific Atlanta remained stuck in third place in the overall Docsis device standings, after wresting second place away from Arris last year. The Cisco subsidiary shipped a combined total of almost 1.6 million data and voice modems in the third quarter, down 6.9 percent from the prior year. Consequently, its market share slipped to 19.2 percent, down from 22.9 percent a year ago.

Table 3: Total Docsis Device Shipments in 3Q07
Vendor Docsis Devices Market Share
Scientific Atlanta
Source: Company reports, Heavy Reading estimates

– Alan Breznick, Senior Analyst, Heavy Reading

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