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Cisco won significant standard definition set-top box business in India in the quarter ending January 26th 2013. Cisco shipped 1.3 million boxes in the fourth quarter compared with 850K in the third quarter, with a large portion of the increase coming from India. Cisco CEO John Chambers remarked that the company has “been more selective in the business we are taking in terms of set-top boxes and the lowest margin set-top box business in particular.”
“Cisco has been able to retain attractive margins delivering set-top boxes in India because the engagements are based on end-to-end services. These engagements include Cisco headend equipment (notably, cable modem terminations or CMTS), middleware, and conditional access systems in addition to the set-top boxes,” comments Sam Rosen, practice director at ABI Research.
Chinese set-top box manufacturers ChangHong and Jiuzhou surged in unit shipments in the third quarter of 2012; and together grew 66 per cent sequentially to nearly 5 million units from 3 million in the prior quarter. The tracked market grew approximately 10 per cent worldwide. ChangHong serves primarily the Asian markets, while Jiuzhou has more of a mix of domestic and international business.
“Asian market strength within the set-top box sector is no surprise,” continues Rosen. “North American and Western European markets are largely flat as Asian markets grow and African markets are expected to open up in the next few years. Western manufacturers are using end-to-end strategies, as shown by Cisco, while Asian manufacturers are operating at lower margins and aiming to compete on price within low-ARPU Asian markets.”