Following word that Cisco Systems Inc. (Nasdaq: CSCO) wants to unload its set-top box unit comes a rumor that Google (Nasdaq: GOOG) is eager to sell off Motorola Mobility LLC 's box business even before the deal is consummated. (See Why Cisco Wants Out of Set-Tops (Or Not).)
If both possibilities end up ringing true, then, ding-dong, the duopoly as we know it is dead. But, it's hard to blame them if they do indeed decide to bug out. The set-top box business isn't what it once was as margins drop and the traditional functions of the set-top box, including security, give way to set-top-free IP-connected TVs and tablets and more elegant software-based security systems that loosen their stranglehold on conditional access.
The set-top box is a dying breed, but the business isn't dead yet, nor will it be for many years. So, in the theoretical absence of the duopoly, what's domestic cable to do? Don't fret too much is a good starting point. Panasonic Corp. (NYSE: PC) may have picked the worst time to exit the U.S. set-top box business, but there is no shortage of folks that are hungry to help cable operators bridge the chasm. Here are some of the leading candidates, plus a few dark horses.
It's already the world's largest set-top box maker, and it knows its way around the U.S. market. Plus, it has the scars to show for its past efforts to crack the duopoly when it was still iron-clad. It knows how to make CableCARD boxes for QAM video and it's no slouch around IP video, making it a great match for cable's legacy and future. (See Comcast Confirms Xcalibur Partners.)
Samsung's commitment to lowering margins and making the set-top box business painful for all the other players has paid off at Time Warner Cable Inc. (NYSE: TWC), Bright House Networks and Cablevision Systems Corp. (NYSE: CVC), and it wants in badly at Comcast Corp. (Nasdaq: CMCSA, CMCSK). Samsung wants to be a major player here and has the tools to deliver cable's programming over IP to tablets and TVs. Cable likes Samsung because it keeps costs in check and gives them a bridge to the CE world. (See Samsung Boxes Break In at Cablevision .)
It's been a painful and sometimes downright ugly process, but TiVo's cable strategy is paying dividends as it sees subscribers rise to new levels thanks to MSO partnerships. Cable's starting to take a real shine to TiVo's UI and over-the-top video capabilities. Also, TiVo gives cable a line into the retail market. (See Comcast Trial Fuses TiVo With VoD.)
Arris may be in the best position to make a play for Cisco's or Motorola's businesses if it can get one of them for a song. Cable trusts Arris's engineering prowess and, in the case of the Motorola situation, would rather see those set-top box assets in Arris's hands than Google's. If not, Arris is still making some nice hay with its QAM/IP Moxi gateways with Tier 2/3 operators, and that business is only expected to get bigger.
It's done well as a source of Digital Terminal Adapter (DTA) devices, and there are rumors that it could become a second source for Comcast's next-gen X1 platform. But Technicolor's U.S. box strategy just hasn't set the cable world on fire. It's got the technical chops, but can it thrive in a low-margin world? (See Comcast IDs Cloud TV Product as 'X1' .)
And now some dark horses…
We'll know more later today if Apple indeed announces new content partners and a revised strategy for the struggling Apple TV platform. But, the question is, can Apple and cable really play nice?
If it can get over the Charlie Ergen stigma, EchoStar can offer cable quite a bit of value with its all-encompassing Aria platform. Its Sling-loaded boxes and stand-alone Slingboxes and adapters give MSOs a solid TV Everywhere/place-shifting play that includes an all-important linear video component. (See EchoStar's Cable Target: 1 Million Subs .)
Please contain your laughter. Huawei's tried its hand at tru2way and was rumored to be interested in buying Motorola a few years ago. As a Chinese vendor, Huawei's stigma in the U.S. makes EchoStar's look trivial, but if cost-cutting continues to be a key differentiator, Huawei and U.S. cable could finally make a lasting connection. (See Huawei DTAs Break In at Suddenlink and US Gets Worried About Huawei .)
For a fleeting moment, ADB seemed poised to make some noise in the U.S. market with tru2way and a new line of "set-back" boxes that are getting some traction in cable's hotel services market, but it's been less-than-committed to the market in recent months. Perhaps an exit by Moto or Cisco could get them to reinvigorate those efforts. (See ADB Makes More US Cable Cuts.)
So, U.S. cable appears to have options aplenty if the duopoly dissolves. Who else is on your list of potential challengers or game-changers?
— Jeff Baumgartner, Site Editor, Light Reading Cable