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Moto Streamlines EMEA Biz With Compal

Moto exec says sale of its EMEA Docsis CPE business to Compal Broadband Networks will help trim costs as MSOs gear up for big wideband rollouts

Jeff Baumgartner

January 13, 2010

3 Min Read
Moto Streamlines EMEA Biz With Compal

Motorola Inc. (NYSE: MOT) unloaded its Europe, Middle East, and Africa (EMEA) EuroDocsis CPE business to Compal Broadband Networks (CBN) in part because the Taiwanese vendor's new sales and support role in the region will yield new efficiencies and help drive down unit costs as MSOs in the region prepare to deploy speedier wideband services in a big way.

Motorola officials confirmed the news and offered its reasoning the morning after Cable Digital News first reported the deal Tuesday. (See Moto Sells EMEA Docsis Modem Biz.)

The company still isn't providing financial terms, but an Avian Securities LLC analyst told Reuters that Moto's European cable modem business is worth about $50 million annually. In a note issued today, Wedge Partners Corp. analyst Brian Coyne put that figure in the $50 million to $60 million range.

Motorola will continue to develop Docsis CPEs, and then license that technology to CBN. In turn, the Taiwanese firm will customize those products for the EuroDocsis market and apply any other changes that are unique to MSOs serving Germany, Belgium, and other parts of the region. CBN already manufactures Motorola's EuroDocsis voice modems, but, in the new scenario, will take on the added responsibility of selling and supporting those products for EMEA cable operators.

No change to R&D
Alan Lefkof, corporate VP and GM of Moto's Broadband Home Solutions division, stressed to Cable Digital News this morning that the decision to enlist CBN does not mean Moto is reducing its level of Docsis CPE product development or that the company is pulling away from the EMEA region.

Instead, at least when it comes to EMEA, CBN will be the beneficiary of that work and will tailor those new products for EuroDocsis environments, which use 8MHz channel spacing (North American Docsis uses 6MHz-wide channels.).

Motorola will continue to handle the central sales and support functions for Docsis CPEs for North America and Asia Pacific. It will also continue to perform those functions for the headend piece of the Docsis puzzle -- the cable modem termination system (CMTS) -- for all regions, including EMEA.

"We... are going to keep inventing new products, new EMTAs, new WiFi gateways, et cetera," Lefkof said. "It [the agreement with CBN] is really a change in business model for the EMEA market, with an attempt to provide more customer support on both ends of the wire for the EMEA MSOs."

But what does CBN bring to the table in EMEA that Moto can't on its own? In Lefkof's view, CBN and its manufacturing owner, Compal Electronics Inc. , are already experts in the field of EuroDocsis, and can help streamline how business is done in the region.

As an example, Motorola typically ships EuroDocsis CPEs from Asia to a warehouse in Central Europe where all final customizations are completed before they are trucked to MSOs. With CBN in the mix, Motorola intends to eliminate that step and have all the manufacturing and EuroDocsis tweaks done in Asia, allowing for those products to be shipped directly to their final destinations.

The thinking there is that some handling costs can sapped out and efficiencies can creep in as EMEA MSOs scale up their wideband rollouts and require larger volumes of EuroDocsis CPEs. Moto isn't publicly saying what costs can be taken out using this strategy.

Still, the decision could affect Moto's cable staffing in the region. Lefkof would only say that some of Motorola's CPE-focused employees will have an opportunity to transfer to CBN. "That's very open-ended at the moment," he added.

Lefkof said Moto and CBN officials are conducting joint meetings with EMEA-region MSOs this week to explain details of the new arrangement.

— Jeff Baumgartner, Site Editor, Cable Digital News

About the Author(s)

Jeff Baumgartner

Senior Editor, Light Reading

Jeff Baumgartner is a Senior Editor for Light Reading and is responsible for the day-to-day news coverage and analysis of the cable and video sectors. Follow him on X and LinkedIn.

Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.

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