Cisco Systems went into damage-control mode after CEO John Chambers told Wall Street last week that it’s decided to give up on low-end set-top box deals (see Cisco Is 'Walking Away' From Low-Margin Set-Top Deals: Chambers).
In particular, Chambers said, Cisco’s set-top box revenue in Europe for the quarter that ended Jan. 26 was down “dramatically” because of the shift in focus: “If it’s purely a bid that is on very, very poor margins, we are not even going to bid.”
For operators relying on such inexpensive boxes, that may have been an alarming announcement.
Joe Chow, VP and general manager of Cisco’s Connected Devices Business Unit, tried to clarify what the boss was talking about in a blog post Monday.
While the company is indeed abandoning low-margin set-top deals in some cases, Cisco “has and will continue to evaluate each opportunity based on our business objectives,” he wrote. “When warranted, Cisco will continue to support these opportunities as a step in the migration to a gateway/client and cloud-based solution.”
That said, Cisco’s “investment focus continues to shift toward intelligent video and data gateways, which will allow our customers to accelerate their migration to new video architectures and next-generation customer experiences,” Chow continued. “As service providers migrate to these new architectures, the need for basic, traditional set-tops will reduce over time.”
Translation: Cisco is not interested in selling cheap set-tops to new customers, but is willing to help current customers make the jump to newer IP-based video architectures.
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