Cost is Being Ripped Out of the Video Ecosystem, Less Opportunity for Cisco CPE
There are many reasons why Scientific-Atlanta and General Instrument do not exist anymore, why those firms initially were gobbled up by the likes of Cisco and Motorola, and why the set-top box business has changed.
The changes also explain why Cisco now has sold off those former Scientific-Atlanta assets.
Initially, the set-top box business was seen as a way equipment suppliers could get into the customer premises equipment supplier end of the video distribution business. But changes in the consumer video subscription business now mean there is less profit in the value chain.
That means taking cost out of the business. So open source has become a more-important trend, and with open source, less opportunity for set-top suppliers. Moves by the U.S. Federal Communications Commission to open up the set-top box to third party competition also play a role.
Comcast’s X1 initiative, which has Comcast supplying its own decoders , is part of that firm’s effort to create additional value third-party approaches do not offer. In other words, the biggest U.S. cable set-top customer now has become a competitor.
Changes are even more advanced in the mobile business, where the smartphone itself effectively becomes an access device, with no need for third-party gear. In large part, that is possible because internet protocol has become the next-generation network of choice, globally.
There are implications. In the mobile arena, the phone itself displaces the fixed network modem, the fixed network set-top, the fixed network Wi-Fi router. In the mobile business, as in the fixed business, CPE costs are being ripped out of the value chain.