Cisco, Motorola Drive CMTS Market

SAN JOSE, Calif. -- Worldwide CMTS revenue was up 3% from 2Q04 to 3Q04, lifted by strong performances from Cisco and Motorola in all regions, especially North America, according to Infonetics Research’s Cable Aggregation Hardware quarterly worldwide market share and forecast report. The top 3 leaders, Cisco, Motorola, and Arris, together capture 82% of the worldwide CMTS market, which is projected to hit $673 million in 2007.

The major drivers for cable aggregation are more bandwidth for consumers and businesses and new packet telephone services; these in turn are driven by competition with DSL providers and FTTH providers.

"Cable broadband subscriber growth in North America continues unabated, with all major MSOs showing healthy single-digit quarterly subscriber growth this year,” said Michael Howard, principal analyst of Infonetics Research and lead author of Cable Aggregation Hardware. “MSOs are maintaining a competitive advantage, despite the momentum growing behind DSL, by offering higher speeds, voice and video bundles, and CPE with wireless and higher functionality.”

3Q04 CMTS Market Highlights

In a separate Cable CPE report, Infonetics Research stated that worldwide total cable CPE units increased 9% between 2Q04 and 3Q04, while revenue decreased by 8% after a 4% increase the previous quarter. Cable units are expected to increase 14% and revenue 4% between 3Q04 and 3Q05. The worldwide cable CPE market reached $1 billion in 2003.

“This quarter appears to mark the beginning of a significant uptick in demand for cable IADs, as demonstrated by the performance of several major vendors in this segment, particularly Arris, but also Scientific-Atlanta, Motorola, and others,” said Richard Webb, directing analyst of Infonetics Research and lead author of Cable CPE. “Arris shipped about 10,000 cable IADs in the first quarter of this year and 30,000 in the second, and then jumped to 175,000 in the third quarter. That’s phenomenal growth, even outstripping their healthy cable modem shipments. This is an indication that MSOs are accelerating their rollout of VoIP services, having completed successful field trials, and are now ready to bulk up their orders of cable IAD products.”

Higher bandwidth, voice over cable, and data/voice/video service bundling are key drivers for broadband cable subscriber growth and product success for cable CPE and CMTS equipment. MSOs are committed to deploy DOCSIS 2.0 and PacketCable equipment to drive new service revenue from residential and business subscribers, which will fuel port growth through 2007. In all regions, cable faces stiff competition with DSL for broadband revenue, and MSOs are now pushing cable CPE with 802.11 and voice capabilities to attract new subscribers and upsell to existing customers.

3Q04 Cable CPE Market Highlights

Infonetics Research Inc.