A piece of research out this week, which actually doesn’t mention Motorola, is damning for the company. It comes from IMS research and simply put says that Pace is the largest set top maker in the world.
Last time someone talked in detail about UK set top maker Pace it was Screen Digest which had the company overtaking Cisco but still behind Motorola in the set top stakes last quarter.
Pace has had big gains in the past year, partly because of its takeover of the Philips set top division, but also because of this strength in getting early to gaining widely accepted HD devices across all pay TV technologies.
IMS says that Pace is the leader in the pay TV set top business globally, and if last quarter another research company reckoned that Motorola was still top of the pile, it says a lot about Motorola and its dwindling influence over the US cable market. But we have to be careful in thinking this is a fresh quarterly conclusion, IMS has just finished counting shipments in 2009, and this could easily be the same story that Screen Digest put out three months earlier, but with a slightly different twist. Both sets of figures, as far as we can work out, are based on the number of devices shipped, not their value or cost.
IMS Research released these figures from its, ‘The World Market for Set-top Boxes and iDTVs’, which it says show that a major increase set-top box sales propelled Pace from third place in 2008 to first in 2009. Again, mostly due then to the takeover of the Philips set top operation.
Pace had revenues during 2009 of £1.1 billion, which translates into around $1.6 billion, and shipments of 9.7 million boxes into the Americas, and 17 million devices overall, this gives us a guideline to how Motorola may be performing. We know that the new Home division had an almost 20% drop last quarter down to $838 million, but if that was scaled up for a full year it would still suggest that Motorola’s Home division is still bringing in around $3.3 billion after its separation from its Networks division at the end of last year. The company figures admit that it was worse in ‘home entertainment devices,’ for which we read ‘set tops,’ which were down 33% from the previous year.
During the period Motorola shipped 3.1 million units, and again, assuming that it does four quarters like this, that would top out at 12.4 million, substantially below that of Pace for 2009, and Pace may well make further inroads.
Average price is always a tough thing to consider in set tops, because the Pace business goes all the way down to €30 or €40 for DVB-T devices, but a crude calculation suggests that the average price for the Motorola devices during last quarter was $270. This isn’t right, because that would be attributing ALL of its Home revenue to set tops, and it does so many other pieces of video infrastructure. But it’s a guideline.
For pace during 2009 it would have been closer to $164. But funnily enough it made less revenue on its Americas sales per device than its European sales, so it was probably even lower than this in the US, where competition is rife.
Even noting the point about being careful of average device prices, the implication is that Pace is shipping HD devices at low prices and taking the meat of the market away from Motorola and Cisco right across their range, in cable and DVB-S in the US, and in IPTV in the blossoming European IPTV market.
For Motorola there is potentially a strategy available which involves using its beloved Android on set tops and tying them to handsets ‘ both as remote controls and alternate viewing platforms. But this move has perhaps been undermined by Google partnering with others to attack the US set top market with Google TV last week.
How the devices and home side of Motorola shapes up as a TV provider in the coming months will be vital to its future, as its core territory is being attacked on all sides, and its handset business, while strengthening, is still weak. Failure to push aggressive usurpers like Pace out of its cable heartlands, will almost certainly mean continuing attrition of its cable revenues, and a slowing of its new IPTV revenues.