Monday November 9, 2009 – Antonette Goroch
Motorola has dominated digital cable STB shipments for some time, with little challenge to its industry wide hegemony in terms of market share. Cisco’s latest acquisition, however, might provide one of the most credible threats to this industry order in some time. Cisco announced last week its intention to buy the STB holdings of Chinese manufacturer DVN Holdings, a leading player in the growing Chinese digital cable STB market. This move will immediately strengthen Cisco’s position as the second largest cable STB supplier, and draws attention to intense competition in the STB industry, as well as the growing importance of the Chinese market.
Cisco bought its way into cable STBs back in 2005, acquiring the number two U.S. digital cable supplier, Scientific-Atlanta. Since then, though, Cisco has lost market share—failing to gain traction in international markets that hold the industry’s growth prospects, while new competitors have entered the U.S., Scientific-Atlanta’s core market, posing a threat to existing shipments.
Source: DTC
This latest acquisition could position Cisco well to strengthen its international presence though, and even challenge market leader Motorola in future years. In units alone, DVN won’t bring Cisco to Motorola’s size, since DVN shipped only about 2.5 million STBs in 2008. Along with Cisco’s 6.5 million, this would bring the total to only 9 million, just over half of Motorola’s 15 million. Still, China is the largest cable market in the world, with some 160 million subscribers (and growing), fewer than a third of which have upgraded to digital. If Cisco’s financial backing can help DVN grow its market share to somewhere between 25%-30% of Chinese shipments, Cisco could be looking at an additional 6-7 million units shipped annually, well within range of Motorola.
