Tops in Boxes

Cable World, May 6, 2002

Byline: ANTHONY CRUPI

The set-top box market is poised to bounce back after a rocky 2001, and while the immediate future may hold some reversals, analysts agree that the digital cable industry should see significant growth by 2003.

According to a recent Kagan World Media report, slower subscriber growth and further delays in the development of functional boxes will conspire to flatten the growth curve in 2002. However, as video-on-demand (VOD) takes root and consumer demand begins to spike, set-top growth should be on the rise again beginning next year.

The Kagan study forecasts a cumulative 32.1 million digital set-tops in use this year and sees that number reaching 72 million by 2006. As customers begin to awaken to the possibilities engendered by VOD, ITV and PVRs, the leaders of the set-top space are preparing for a full-out product blitz. What follows is a summary of the set-tops industry leaders will be introducing at this week's NCTA show.

MOTOROLA

Motorola is the sultan of digital set-tops, with over 17 million units shipped nationwide. And while the DCT-2000 series has been an industry leader in terms of scalability and cost, the pendulum is shifting back toward thick-client boxes. As customers look for a more personalized viewing experience, Motorola intends to offer "gateways with integrated HD decoders, home networking capability, integrated cable modems and USB ports galore," said Mark DePietro, VP-marketing and systems engineering of Motorola Broadband.

Much of the push for advanced client services is coming from the Charter Communications camp. In February, Motorola and middleware firm Digeo announced a deal to produce a new class of set-tops for the MSO that will be capable of delivering a plethora of advanced services, including ITV, personal video recording, telephony and wireless home networking. In order to squeeze optimal functionality from the 2000s, Motorola is looking toward deploying companion devices. The soon-to-be-launched BMC8000 will be an add-on to existing 2000 boxes, which make up about 65%, or 1.91 million, of the 2.95 million digital boxes deployed by Charter.

This approach of adding features to legacy set-tops should enable Charter to roll out advanced services much faster, thereby meeting the challenge of DBS providers EchoStar and DirecTV.

The BMC9000, which will be put through its paces in the first half of 2003, will be a stand-alone unit combining the capabilities of the 8000 and the 2000.

The term "set-top box" is conspicuously absent in Motorola's publicity material, a semantic wrinkle that is meant to stress the versatility of the devices. The BMC prefix is shorthand for "broadband media centers," DePietro said, adding that both new boxes will be able to support multiple TVs as part of its home networking scheme.

"The beauty of the BMC8000 is that the customer won't have to duplicate the full hardware set at every location in the house," DePietro said.

Motorola's thick-client play comes at a time when many industry observers consider the high-end DCT-5000 dead in the water. Crammed solid with memory, the 5000, in conjunction with Microsoft's middleware, was supposed to have led MSOs to the promised land of advanced services. After Microsoft was more or less snubbed by lead client AT&T Broadband, many operators abandoned their plans to deploy the 5000 altogether. Of course, the hefty price of the box - somewhere in the neighborhood of $500 a pop - was too much to ask from an industry that had yet to see any compelling data suggesting the existence of a market for ITV in the first place.

Charter executive VP and CTO Steve Silva said that while other MSOs balked at investing in thick-client boxes, his company remained focused on the big picture. "The thin-client solutions are great mass-market products," he said. "Over time, however, as consumer expectations evolve, we're going to have to be able to offer something more advanced. In five to seven years, I predict the 8000s and 9000s will be the industry standard."

Motorola is keeping its lips sealed on price points, but a Digeo spokesperson did reveal that its Media Center Companion reference design platform for the 8000 would cost $350 per TV. The Media Center One design platform for the 9000 would in turn cost about $275 per TV. Conservative estimates price the actual boxes at $300 (8000) and $500 (9000).

SCIENTIFIC-ATLANTA

Scientific-Atlanta, Motorola's chief rival in the war for set-top supremacy, looks to gain ground with the introduction of a pair of new boxes. As S-A has it, its Explorer 3200 set-top is the only stand-alone box that integrates XOD (anything-on-demand), PVR and digital cable. A smallish unit - about 30% the size of its predecessor, the 3100 DHCT - the 3200 is nevertheless loaded with powerful features, including what one S-A spokesperson calls "the fastest RISC [reduced instruction set computer, a type of microprocessor that recognizes a relatively limited number of instructions] around." The 32-bit, 166-MHz processor, paired with a reverse-path DAVIC transmitter capable of sending and receiving data at speeds of 1.544 Mbps, allows for instantaneous communication between the box and the head-end.