& cplSiteName &

What's Left of Cisco's Love Affair With Cable?

Mari Silbey
5/3/2018
50%
50%

The signs were clear before Cisco announced the sell-off of its Service Provider Video Software Solutions business earlier this week. In fiscal year 2017, Cisco managed to stem the unit's losses somewhat over time, but revenues still dropped precipitously by 41% and 30% respectively in the second and third quarters, before declining at a more moderate rate of 10% in the fourth quarter.

The breakout of video software sales disappeared altogether starting in fiscal year 2018. In fact, Cisco stopped using the word "video" entirely in its earnings press releases beginning two quarters ago.

The shift for Cisco Systems Inc. (Nasdaq: CSCO) is fairly dramatic. The company bought set-top maker Scientific Atlanta in 2005 before scooping up NDS for its video software in 2012. The acquisitions made Cisco a juggernaut in the cable video industry, and set up a Cisco/Motorola duopoly that dominated the market for several years.

This was also at a time when Cisco looked to the cable video business as a foil for its challenges in the retail market. After buying up Linksys for its retail networking equipment in 2003, Cisco sold that business off to Belkin in 2013. Over a much shorter time frame, Cisco also acquired the popular consumer Flip camera business in 2009, only to shut it down two years later.

But Cisco's foray into the pay-TV sector didn't go as planned either. Blame market changes. Blame too much diversification. Regardless of the reason, it turns out that the company's reinvention as a consumer video powerhouse didn't stick. (See Cisco Dumps Video Software Biz, Ends NDS Era.)

The now-obsolete Cisco Explorer 8640 set-top
The now-obsolete Cisco Explorer 8640 set-top

There is one piece of the cable service provider business that Cisco has held on to, however. That's the division dedicated to broadband gear in the cable access network. And this is where things get interesting.

There is arguably more happening in the access network space now than in the last 20 years. In fact, new companies are entering the market, whereas in the rest of the cable industry, vendors are fleeing for the hills. (See Why Cable Is Upgrading Networks Now.)

Even further, the cable access market is headed in a direction that Cisco wants to go -- edging toward a future that looks more like enterprise networking than the outpost of cable infrastructure.

There are still significant challenges. Virtualization, the move toward software and white boxes; these are issues that pose a serious threat to Cisco's future. But they're also challenges that Cisco knows it has to face and overcome if it wants to survive. (See Cisco Bows to Carrier Demand for Software Outside the Box.)

Not so much with video.

More than a decade in the cable TV business is too long to call Cisco's romance with the sector a mere dalliance. But in the end, the relationship hasn't lived up to the hype. IP networking is where Cisco's heart lies. Set-tops and video software? More of a long-term fling.

— Mari Silbey, Senior Editor, Light Reading

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
bosco_pcs
50%
50%
bosco_pcs,
User Rank: Light Sabre
5/3/2018 | 3:27:31 PM
A Norm more than an exception
If memory serves, CSCO bought Pirelli optical for billions at the height of the telecom bubble. Then there is the Tandberg's telepresence. And Linksys is slightly better than Flip. So this is no surprise.

John Chambers used to brag CSCO would dominate the top 3 of any segments it entered but he didn't say what if the segment became obsolete.

Still, he was a reasonable nice guy - unless he got ticked off, like what Cabletron did. And there were some great acquisitions, like the OpenDNS. 
More Blogs from MariNation
There's still a lot of ambivalence from operators around edge computing, and the killer app for many of them is anything that helps deliver more bits for less money.
And if so, what does a devil's bargain with Android TV mean?
How much will it cost to add intelligence to the network edge?
The set-top is Comcast's primary consumer interface, but it's not the best tool for smart home control.
Featured Video
Flash Poll
Upcoming Live Events
September 24-26, 2018, Westin Westminster, Denver
October 9, 2018, The Westin Times Square, New York
October 23, 2018, Georgia World Congress Centre, Atlanta, GA
November 6, 2018, London, United Kingdom
November 7-8, 2018, London, United Kingdom
November 8, 2018, The Montcalm by Marble Arch, London
November 15, 2018, The Westin Times Square, New York
December 4-6, 2018, Lisbon, Portugal
March 12-14, 2019, Denver, Colorado
All Upcoming Live Events
Partner Perspectives - content from our sponsors
One Size Doesn't Fit All – Another Look at Automation for 5G
By Stawan Kadepurkar, Business Head & EVP, Hi-Tech, L&T Technology Services
Prepare Now for the 5G Monetization Opportunity
By Yathish Nagavalli, Chief Enterprise Architect, Huawei Software
Huawei Mobile Money: Improving Lives and Accelerating Economic Growth
By Ian Martin Ravenscroft, Vice President of BSS Solutions, Huawei
Dealer Agent Cloud – Empower Your Dealer & Agent to Excel
By Natalie Dorothy Scopelitis, Director of Digital Transformation, Huawei Software
All Partner Perspectives