RGB Shelves CMAP Product Plans
RGB Networks Inc. confirmed this week that it's exiting the market after deciding that the near-term opportunities for CMAP are too limited. RGB expects MSOs to continue adding broadband capacity using traditional gear for a while before making the leap to the next-gen cable access network platform.
The digital video specialist was developing an Access Shelf for the modular implementation of CMAP based on its Video Multiprocessing Gateway (VMG) chassis, but in April decided to pull back development and pass word to service providers such as Comcast Corp. (Nasdaq: CMCSA, CMCSK), Cox Communications Inc. and Rogers Communications Inc. (Toronto: RCI), RGB CEO Jef Graham says. (Comcast has led CMAP from the start; Time Warner Cable Inc. (NYSE: TWC) has undertaken a similar project called the Converged Edge Services Access Router (CESAR).) (See RGB Targets Comcast's CMAP and TW Cable Hails CESAR, Not CMAP .)
Graham says RGB decided to bug out after it became clear that operators were committed to doubling and tripling their current capacities using cable modem termination systems (CMTS) and edge QAMs before extending the bridge to CMAP. "That pushed the opportunity out in our mind," he says. "We decided that wasn't a business we wanted to be in. ... It just didn't make short-term business sense."
That situation could favor existing edge QAM vendors, but RGB doesn't want anything to do with that market, either. "It's a low-margin business," Graham says of the edge QAM market. "There are good incumbents in that business, and it's a difficult business to penetrate."
RGB's exit removes a potential Access Shelf supplier from the CMAP mix, but several others are still in there to pick up the slack, including Harmonic Inc. (Nasdaq: HLIT), BigBand Networks Inc. (Nasdaq: BBND) and LiquidxStream Systems Inc.
The bigger concern may be who will step up to develop the CMAP Packet Shelf they'll hook into. Juniper Networks Inc. (NYSE: JNPR) is considered the leading candidate for that but hasn't announced any firm product plans. Alcatel-Lucent (NYSE: ALU) remains on the fence, and Huawei Technologies Co. Ltd. is considered a long shot. Cisco Systems Inc. (Nasdaq: CSCO), Arris Group Inc. (Nasdaq: ARRS) and Motorola Mobility LLC are all expected to develop integrated CMAPs. (See Comcast, Moto Invest in CMAP Startup and AlcaLu Undecided on Cable Gear Opportunity.)
The time line for CMAP adoption is still hazy, with the most aggressive estimates saying trials will start this year followed by some initial deployments in 2012. The port densities of CMAP/CESAR are expected to help cable operators with their IP video migrations. (See Comcast Targets First CMAP Field Trial .)
Some vendors have voiced concerns about whether margins can remain healthy enough to keep them in the market long-term, or whether they'll fall to commodity levels that create a bloody price war. CMTS port pricing today is in the range of $1,500 to $2,000, and buyers will want CMAP to drop to a fraction of that.
That IPO thing
Given that RGB is still considering an IPO (a filing in early 2012 is its current target), it's understandable that the company would back away from CMAP, a cable-specific product, and instead apply more of its resources toward gear that addresses the broader cable, telco and wireless industries. For the latter case, Graham says RGB's VMG product line, which helps service providers deliver video to multiple screens, is "on fire." [Ed. note: We hope that's not a literal feature.] (See RGB's TV Everywhere Offer: A Video God Box .)
"The market wants to see more diversity and more predictability," says Graham, who visited with buy-side analysts in March.
— Jeff Baumgartner, Site Editor, Light Reading Cable