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February 25, 2013

Cisco News - Cisco Still Sees Opportunity in SD STBs

By Tara Seals, TMCnet Contributor

Despite the fact that HDTV growth is the more buzz-worthy topic in content formatting, standard definition is still offering a growth trajectory in certain markets. In the latest quarter, Cisco Systems (News - Alert), Inc. saw a significant uptick in SD set-top boxes (STB) shipped in India.


For the quarter ending January 26, its fiscal fourth quarter, Cisco shipped 1.3 million boxes. That’s compared to 850,000 in the third quarter, with a large portion of the increase coming from India.

Cisco CEO John Chambers (News - Alert) remarked that the company has “been more selective in the business we are taking in terms of set-top boxes and the lowest margin set-top box business in particular.”

Analysts have followed the move.

“Cisco has been able to retain attractive margins delivering set-top boxes in India because the engagements are based on end-to-end services,” said Sam Rosen, practice director at ABI Research (News - Alert). “These engagements include Cisco head-end equipment (notably, cable modem terminations or CMTS), middleware and conditional access systems in addition to the set-top boxes.”

Meanwhile, Chinese set-top box manufacturers ChangHong and Jiuzhou surged in unit shipments in the third quarter of 2012; and together grew 66 percent sequentially to nearly five million units – up from three million in the prior quarter. The tracked market grew approximately 10 percent worldwide.

ChangHong serves primarily the Asian markets, while Jiuzhou has more of a mix of domestic and international business.

“Asian market strength within the set-top box sector is no surprise,” noted Rosen. “North American and Western European markets are largely flat as Asian markets grow and African markets are expected to open up in the next few years. Western manufacturers are using end-to-end strategies, as shown by Cisco, while Asian manufacturers are operating at lower margins and aiming to compete on price within low-ARPU Asian markets.”




Edited by Braden Becker



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