Gartner: Cable Modem Market Grows

SAN JOSE, Calif. -- Worldwide cable modem market shipments totaled more than 3 million units in the third quarter of 2002, a 19.4 percent increase from the same period last year, according to Dataquest Inc., a unit of Gartner, Inc. (NYSE: IT and ITB). Worldwide cable modem shipments totaled 2.5 million units in the third quarter of 2001. "North America continues to see strong demand for cable broadband access services in the third quarter of 2002, and shipments of cable modems reflect this trend," said Patti Reali, principal analyst for Gartner Dataquest's worldwide Telecommunications group. "U.S.-based vendors will start to see even more intense competition for the low-end, simple-functionality modems from the Asian-based manufacturers, and until the market launches advanced services that require more complex, higher-functionality CPE devices enabling home networking and other applications, prices will continue to fall," Motorola Broadband Communications remained No. 1 with 32.6 percent of the market (see Table 1). The company continued to do well in the Data Over Cable Service Interface Specification (DOCSIS) space, where it was also the top vendor. Terayon fell from No. 2 to the No. 5 spot because of a weak quarter in the non-DOCSIS segment. Gartner Dataquest found that non-DOCSIS units accounted for only 1.3 percent of worldwide cable modem CPE units in the third quarter of 2002. Table 1: Worldwide Cable Modem CPE Vendor Unit Shipment Estimates, 3Q02 (Thousands of Units)

Gartner Dataquest expects the market to shift away from recognized retail brands, to units produced by original design manufacturers (ODMs) with aggressive support from cable modem chip vendors, essentially cutting out the need for name brand vendors. This trend has already begun in the Asia/Pacific region. Gartner/Dataquest