I asked Cisco if it had additional details or comment on the spectacular decline of its cable set-top box sales, which fell 29% in the most recent quarter. That’s following a 40% drop in sales to North American operators for the Oct. 30, 2010, quarter (see Cisco Quickly Sees $400 Million Worth of Set-Top Business Dry Up and Cisco Cable Set-Top Sales Tumble Again).
Here is what the company sent: “We believe that there is a great deal of opportunity in this market as video continues to transform consumers’ experiences. We are not exclusively in the set-top box business. Cisco’s video business has broad scope, and we are investing more and more in the complete user experience. The future of our video business has a balance of client devices — including the set-top box and video gateways, the network and cloud technologies.”
Cisco reiterated that its strategy for the TV provider market revolves around Videoscape, which is supposed to give operators tools to merge traditional video services with Web and mobile content and applications. Chairman and CEO John Chambers highlighted the Videoscape strategy on the Feb. 9 earnings call with Wall Street analysts.
“We are focused on driving revenue from the network and support for Videoscape,” Cisco said. “It is a fantastic time for Cisco because Videoscape moves the value into the network.”
The company added that service providers “would much rather invest in evolving their network vs. spending capital on STBs [set-top boxes]. They want to deliver their experience to as many screens as possible — through multiple devices, not just the STB. The gateway is becoming a critical aspect of service providers’ Videoscape planning. The gateway is a great extension of the CDN — helping to optimize video traffic and delivery with added storage.”
I agree with the last point: Operators would rather not spend $400 or $500 or whatever it is for an HD DVR anymore. But unfortunately for Cisco, that’s going to shave a lot off the top line for the Service Provider Video Technology Group.
And with the transition to IP video and the disruption that implies on the set-top side, there’s an opportunity for challengers to swoop in and take share: TiVo, for example, has beat out both Cisco and Motorola in wins with operators including Charter and Suddenlink (see Charter Tags TiVo For DVRs, Next-Gen TV and Suddenlink Turns to TiVo).