Who's Afraid of tru2way?
But it also opened the door to plenty of questions about how that could affect U.S. cable's top two cable box suppliers: Motorola Inc. (NYSE: MOT) and Cisco Systems Inc. (Nasdaq: CSCO)/Scientific Atlanta .
A new breed of tru2way TVs equipped with CableCARD slots, such as those demonstrated here by Panasonic Corp. (NYSE: PC) and LG Electronics Inc. (London: LGLD; Korea: 6657.KS) , will allow consumers to use the cable operator's interactive guide and two-way services such as video-on-demand (VOD) without a separate set-top box.
Although such devices could steal away some share from the top dogs, the existing digital cable equipment duopoly will remain positioned to reap a portion of those revenues. That's because those new TVs and set-tops will still require CableCARDs based on Motorola's MediaCipher conditional access system or Scientific Atlanta's PowerKEY platform. And at last check, they aren't giving them away like broth at a soup kitchen.
Cisco and Motorola are incorporating tru2way in their boxes, so there's not much stopping them from developing a retail set-top strategy, either.
That said, neither appears overly concerned about the possibility of seeing a legion of CE companies step in with tru2way-powered equipment and sap their market dominance.
Although the percentage of share may go down, "we can still grow the business because the pie is getting so much bigger," says Dan Maloney, a Motorola EVP, and president of its Home & Networks Mobility division. On that, he points out an estimate that there are about 1.3 set-tops per cable home today, but more than three TVs.
"We firmly believe there will always be a place for set-tops in the home. Not every TV will have a set-top on it; not every TV today has a set-top on it," notes Dave Clark, director of product strategy and management at Cisco/SA.
"We're going to be aggressive and try to expand our market share when it comes to set-tops and set-top box devices," he says. "We'll come in through service providers and through retail"
The how and when part for retail is still sketchy, though.
Clark points to a "heavy brand" like Linksys as one possibility. "But you're also going to see the Cisco brand show up more and more in the home," he notes.
"Probably not real soon" is how Clark responded when asked when one might expect to find a Cisco-branded set-top on a retail shelf. "When that market needs to happen, we'll be there, and be there in force," he says.
"We will play at retail, but the value proposition has to work" for retailers, suppliers, and the cable MSO, Maloney says.
And he brings up an important question: "Why do I want to own a set-top? It makes no sense to put our standard host set-top box at retail, and it makes no sense to the retailer."
Consumers won't want to buy a device if it doesn't add any value to what they can already get direct from the cable operator, so consumer electronics firms will truly have to innovate to stand much of a chance.
Although tru2way was the message of this year's show, cable's slow embrace of retail also means it will take time for set-top makers to enter the market in a meaningful way.
"It'll be a couple of years before retail set-tops get traction here in the U.S.," Maloney predicts.
But that doesn't mean others aren't giving it a try now. TiVo Inc. (Nasdaq: TIVO) has added the CableCARD in one-way devices that, with the help of the so-called "tuning resolver," will enable them to become two-way. TiVo has also won some concessions so its guide and user interface will be restored when it comes out with a product based on tru2way tech, which used to be called the OpenCable Platform. (See NCTA Sees Solution to Switching Snag and TiVo à la Mode .)
Meanwhile, Digeo Inc. , a company backed by Paul Allen, will soon start to sell a $1,000 one-way, CableCARD-based, multi-room HD-DVR equipped with a high-res interface and a bounty of interactive features and applications fed via a high-speed IP port. [Ed note: We'll have much more on Digeo's new retail and direct-to-MSO strategy soon.]
"We think [the retail package from Digeo] is far and above what Verizon and AT&T are offering. Retail can be a real asset to the cable operator," says Digeo CEO Mike Fidler, a former Sony Corp. (NYSE: SNE) exec.
— Jeff Baumgartner, Site Editor, Cable Digital News