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The Death of the Set-Top Box?

Jeff Baumgartner

If you believe some of the headlines out there in the wake of news that Sony Corp. (NYSE: SNE) is suddenly smitten with tru2way, one might think that the day of the digital cable set-top is fading fast.

Not exactly true. While cable operators would love to get them off their capex budgets, the digital box will be around for many, many years to come. Or did everyone not notice that many of the tru2way products announced at last week's cable confab in New Orleans were for set-tops based on the "open" hardware/middleware platform, or at least for new boxes that bake in support for the CableCARD security interface? (See ADB Scores tru2way Certification, New Moxi Boxi, and Thomson Shows Off at NCTA.)

Funai Electric Co. Ltd. (OTC: FUAIY) is also getting into the act. And let's not forget that the cable industry has made some special concessions so TiVo Inc. (Nasdaq: TIVO) can make tru2way gear. (See TiVo à la Mode and NCTA Sees Solution to Switching Snag.) Last I checked, TiVo is still in the box business.

Sure, there are some set-top-free tru2way TVs in the mix, too, from the likes of Panasonic Corp. (NYSE: PC), LG Electronics Inc. (London: LGLD; Korea: 6657.KS) , Samsung Corp. and, someday, Sony -- and those products might even create interest among consumers who love interactive cable services like video on demand but hate the set-top. Besides, tru2way-based TVs can't do any worse than those extremely limited, unidirectional plug-and-play sets did. (See CableCARD Update III .)

And where does the digital video recorder (DVR) fit into all this? Most consumers will rely on DVR-set-top combos for their time-shifting needs for awhile yet, though we've even seen and heard evidence that TV makers want to build tru2way TVs with on-board DVR capabilities. So, expect tru2way TV to complement, not replace, the set-top.

We posed the death-of-the-set-top-box question in January, when the cable industry formally unfurled the tru2way brand, and we witnessed some budding support for it from TV makers. And it's fair to say that Cisco Systems Inc. (Nasdaq: CSCO) and Motorola Inc. (NYSE: MOT) (predictably) weren't shaking in their boots at the mere suggestion that tru2way could somehow siphon away their profitable set-top businesses. (See Who's Afraid of tru2way?) And they look to profit from other devices that use tru2way, anyway, since the majority of them will still have to rely on CableCARDs made by Cisco or Motorola for the foreseeable future.

The most significant implication of the Sony-cable accord is not that set-tops are going the way of the dodo. The bigger ramification is that that the cable industry and Sony finally came to terms on the cantankerous two-way issue, and added yet another CE giant to the tru2way camp. Getting over this important hurdle, plus the U.S. cable industry's pledge to roll out and support tru2way should create the "common reliance" the CE industry craves. That, in turn, should curry favor with the Federal Communications Commission (FCC) and result in DCR+, not the set-top box, being the one that's pushing up daisies. (See Two-Way Battle Reaches FCC.)

– Jeff Baumgartner, Site Editor, Cable Digital News

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