Cisco: 'We Love Set-Top Boxes'

Cisco tries to defuse the rumor that its set-top unit is for sale, noting that John Chambers says it's committed to the market, and that's that

Jeff Baumgartner, Senior Editor

February 21, 2012

3 Min Read
Cisco: 'We Love Set-Top Boxes'

Cisco Systems Inc. (Nasdaq: CSCO) is committed to the set-top box business, and don't let anyone tell you any different.

That was the crux of a message Cisco released Monday as it looks to defuse a rumor that the company is trying to unload its set-top box business. The New York Post reported on Sunday that private equity firms are among the most likely suitors for Cisco's STB business. (See Cisco Puts STB Unit Up for Sale.)

The company told Light Reading Cable that Cisco doesn't "comment on rumors or speculation," but company Director of Corporate Communications John Earnhardt went a step further on Monday afternoon by addressing the speculation in a blog post.

"Let me be as clear as I can: we love set top boxes," Earnhardt wrote.

He backed that up by reminding everyone that Cisco Chairman and CEO John Chambers, on the company's recent second-quarter earnings call, stated: "In terms of set-top boxes, we are very much committed to this marketplace."

"I hope that this clarifies any erroneous, un-sourced comments that might be out there in the marketplace," Earnhard wrote, allowing that Cisco's service provider customers have asked the company to help them migrate from "traditional" set-tops to IP set-top boxes that tie into Cisco's multi-screen Videoscape platform. Cisco, by the way, sold its set-top plant in Juarez, Mexico, to Taiwan-based Foxconn Technology Group last summer as part of a broader cost-cutting effort. (See Foxconn Buys Cisco's Set-Top Factory .)

In some ways, Videoscape does de-emphasize traditional set-top box hardware, because it's increasingly reliant on cloud-based delivery systems and software-based clients that can emulate that functionality in IP-connected TVs, tablets and smartphones. In fact, Cisco's been buying companies to help fill in some technology gaps in the Videoscape platform. (See The Disappearing Set-Top , Cisco to Buy BNI Video for $99M and Cisco's Videoscape Stresses Cloud Control.)

However, the New York Post isn't the only one that's buying into the rumor that something is afoot at its STB division. An industry source familiar with Cisco's plans told Light Reading Cable that it's his understanding that the vendor is "shopping it selectively," but did not say if that interest was for the whole STB division or limited to only its legacy, pre-Videoscape set-top products.

Even if Cisco stays in the set-top box game, the business is less lucrative than it used to be. Among recent examples, sources say Samsung Corp. , which competes with Cisco at key accounts such as Time Warner Cable Inc. (NYSE: TWC), Bright House Networks and Cablevision Systems Corp. (NYSE: CVC), has been particularly aggressive with a pricing strategy that has been causing set-top box margins to shrink. (See Samsung Boxes Break In at Cablevision .)

And that market is becoming increasingly competitive. The world's top set-top maker, Pace plc , for example, has been making strides in the U.S. market, scoring a deal to make a video gateway that will power Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s next-gen "X1" video product. (See Comcast IDs Cloud TV Product as 'X1' and Comcast to Swing Xcalibur Wide in 2012.)

— Jeff Baumgartner, Site Editor, Light Reading Cable

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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