Earnings reports

Cisco Keeping Set-Top Fire Stoked

5:00 PM -- Cisco Systems Inc. (Nasdaq: CSCO) is getting out of the business of manufacturing set-top boxes, but it's going out of its way to emphasize that it has no plans to exit the box business altogether. It still wants to sell set-tops as part of its budding Videoscape platform, even if it's leaving it to someone else to actually make the things.

"We saw solid growth in the set-top box business, and to be clear, we remain committed to this segment of the portfolio," Cisco EVP and COO Gary Moore said on Wednesday's earnings call. (See Cisco Says It's Ready to Fight.)

Questions about Cisco's long-term commitment to set-tops bubbled over after Cisco announced it had sold its Juarez, Mexico, facility to Foxconn Electronics Inc. , hopeful that the move would help improve product margins. (See Foxconn Buys Cisco's Set-Top Factory .)

But Cisco can't exit the set-top box business completely for quite a while. Its new focus is Videoscape -- its overarching video architecture -- and hybrid QAM/IP gateways and IP-only set-tops will remain important cogs in that system, even as pay-TV operators start to migrate to a set-top free world that's increasingly dependent on a cloud-based approach to services and apps that can run on IP-connected TVs. But MSOs and other video service providers aren't going to turn that corner overnight. Set-tops will continue to play a role for the foreseeable future. (See Can Videoscape Save Cisco's Set-Top Business?)

And the video business was a bright spot for Cisco for the fiscal year that was (orders were up 10 percent and revenues increased 11 percent at the old Scientific Atlanta division), even as it tries to simplify everything and restructures how it's going to run its video business -- and who's going to run it -- in the year that lies ahead. (See Cisco's Videoscape Leader Resigns.)

— Jeff Baumgartner, Site Editor, Light Reading Cable

DCITDave 12/5/2012 | 4:56:22 PM
re: Cisco Keeping Set-Top Fire Stoked

I'm still confused. I saw two Videoscape demos at CES in January that didn't include a set-top box at all. One of the demos did include the Flip camera, which is no longer a Cisco product. Some I'm still finding it tough to understand what Videoscape is, what it includes and why it even matters.

DCITDave 12/5/2012 | 4:56:19 PM
re: Cisco Keeping Set-Top Fire Stoked

Great point about gateways. I know Pace (formerly 2Wire) had gateways that could store a hard drive (for DVR and data backup) and thus (in my mind) the set-top was well on its way to being obsolete.

I'd rather have a largish gateway in one room and no set-tops than a gateway in one room and set-tops under every telly. Doesn't make sense to have all that power and all that waste when the technology is so far beyond that.

Anyway, as a consumer, I wish nothing but failure to set-tops and all who keep littering our homes with these useless hotplates.


ycurrent 12/5/2012 | 4:56:19 PM
re: Cisco Keeping Set-Top Fire Stoked

The STB is becoming a "functionality" similar to the TV becoming an "experience" which can then be located/delivered in multiple places: alongside the TV, in the TV, in some other IP connected device as a soft client... Although defining the "functionality" and "experience" will take time to transition from marketing speak/gibberish to reality.

As for Cisco, the STB challenge is two-fold (at least).  First,we're seeing the big growth in shipments in emerging markets.  Great.  So orders go up, but margins? Second, what's the latest guess on the mix between STBs and gateways? Will gateways replace 10% of the STB market, or 90%?

Depends who you ask at Cisco... The Scientific Atlanta folks are still there with one opinion, while the ex-MSFT head with a different opinion is, well, elsewhere.

Jeff Baumgartner 12/5/2012 | 4:56:18 PM
re: Cisco Keeping Set-Top Fire Stoked

I thought you might be referring to the much-maligned Moto DCT-5000 from yesteryear... it never got deployed, but legend has it that it doubled as a handy grill... helpful when you want to fry up some snacks during the commericals. JB

ycurrent 12/5/2012 | 4:56:18 PM
re: Cisco Keeping Set-Top Fire Stoked

But if you could cook dinner on them? Apparently you should be able to plug your fridge into the DVR and still have excess capacity to warm your poptart.

Or maybe that's the secret behind Jon Kaplan's (Flip) The Melt business venture?

rjmcmahon 12/5/2012 | 4:56:15 PM
re: Cisco Keeping Set-Top Fire Stoked

This seems like a semantic discussion, i.e. in the long term what's the difference between a gateway and a STB?  Technically speaking, not much. The real reason cable cos "own" the STB is to maintain control of distribution of content where a consumer purchased GW has an expectation of unfettered access to any content.  (From a cost perspective it sure is a lot better for the consumer to pay for the CPE.)  I suspect we'll see this separation blur as we shift to consumer purchased content and as the cable cos move to be primarily bit distributors.  (Though by that time, much of mass media and bit distribution may merge into one a la Comcast/NBC.)

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