Traditional Set -Top Box Vendors To Face Heated Competition From CE Vendors, Says ABI

Cox and Scientific-Atlanta have begun to move the set-top box into the retail market in Phoenix, AZ.

OYSTER BAY, N.Y. - - August 20, 2003 - - There was a time when the set -top box (STB) was simply a device - - owned by the cable operator and leased by the consumer - - through which cable programming could be viewed at home. But this has started to change. Cox and Scientific -Atlanta have begun to move the set -top box into the retail market in Phoenix, AZ. And now, an agreement pending at the FCC between top cable companies and CE makers could exacerbate this trend.

The "plug & play" agreement, as it is called, pushes for a standard allowing cable subscribers to directly connect integrated DTV receivers to their cable systems and receive basic and premium (one -way) digital programming. If approved by the FCC in the coming weeks this will afford various players, including CE vendors, the opportunity to try their hands at marketing their present and future CE products independently of the offerings of the local cable provider.

Research firm ABI predicts that by the end of 2004, just less than one million HD (high definition) enabled set -top and satellite receivers will be in use in North America. By the end of 2005, ABI predicts that over 15 million PVR (personal video recorder) enabled set -top and satellite receivers will be in use worldwide, according to a new study.

"The traditional STB vendors will start to build solutions that are retail consumer -friendly, while the traditional CE vendors will encroach onto the set -top turf by offering DVD recorders, game consoles and PVR devices that are digital cable -ready," explains Vamsi Sistla, a senior analyst with ABI. "This competition will be healthy for consumers and will foster new and interesting improvements in home entertainment."

"If the STB industry incumbents do not adapt to changing technology and business models then CE leaders such as Sony, Toshiba, and Samsung, with years of consumer marketing experience and broad retail distribution channels, are positioned to steal their market share," continues Sistla. "If CE vendors offer more attractive and cheaper solutions, then MSOs will find value in dealing with the CE leaders rather than with the set -top box industry incumbents."

All this is a benefit for consumers who are finding variations and options in the devices, and would rather own them than lease them from the cable operator. The cable companies are supportive of high -end STBs priced below $100 by vendors, as this would translate into more digital cable subscribers.

ABI provides continuous coverage of the home entertainment and broadband consumer electronics industry through a series of reports and services. ABI's latest report, "Cable, Satellite and Terrestrial Set -Top Boxes: Entering a New Phase With PVR, VOD, HD and Plug -and -Play," offers detailed analysis, forecasts, and market trends of the various technologies related to the set -top industry. In -depth profiles of the major industry players are provided, along with detailed analysis of their technology offerings. A survey of the regulatory environment as well as a review of business models is also provided.

About ABI ABI is a N.Y. -based technology market research firm founded in 1990. ABI publishes market research and technology intelligence on the wireless, automotive, electronics, networking and energy industries. Details can be found on the web at or by calling 516 -624 -3113.

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