Set-Top Box Market Frenzy
sumnet.com
From Electronic News--February 8, 1999
By Peter Brown
San Jose-- Almost weekly, a new round of electronics companies pledge their allegiance to
OEMs and component makers for digital set-top boxes, cable and satellite broadcast
markets. Despite the presence of several 'gorillas" the market continues to attract new
players.
So what drives these companies to actually want to get down and dirty in this highly
competitive market? It has to be something viable and attainable. And that is pure,
unadulterated demand. High volumes of demand for satellite, cable and digital television
(DTV) products for the home. Digital set-top box revenue for satellite, cable and DTV this
year alone are forecasted to be $4.7 billion with 14 million units shipping, according to
Cahners In-Stat Group, based in Scottsdale, Ariz. For digital direct broadcast systems
(DBS). In-Stat forecasts in 1998 10 million set-tops were sold worldwide. This is huge
growth for a market that was only shipping a few thousand units a couple of years ago.
"We are seeing many customers promote their design wins to encourage others to sign up,"
said Michelle Abraham, senior analyst at In-Stat. "Everyone is looking for the large
customers and more and more competitors each week are coming out and entering the
market to make that more difficult."
Some of these other companies are those with MPEG encoder/decoder functions, a front
or back end reference design offering or digital signal processing technology that they
believe can be used for this emerging market.
"The honey does attract a lot of bees and you have a situation where we are in the front
end of an exciting market opportunities and high growth segments," said Dale Ford, senior
analyst at Dataquest, a market research firm in San Jose.
The leaders in the set-top market, such as ST Microelectronics Inc.,
C-Cube Microsystems Inc., BroadCom Corp. and LSI Logic Corp., are continually being challenged by new
entrants into the market such as Zoran Corp., ESS Technology Inc., and many, many
others including various start-ups.
However, some may be rash in entering the technology. "Staying focused is a problem for
a number of companies in this market," said Ford. "Rather than finding the next big growth
area, they try everything and that hurts the overall company line." Ford noted that some
companies onto their third generation of set-tops have chosen a different technology each
and every generation leaving those other ICs used in the past high and dry. Needless to
say, this might crush start-up companies with only one or two products and could drive
others out of the market entirely. Yet, new companies continue to take that chance.
The Cable Equation
One area that seems to be generating a significant amount of heat is in the cable set-top
area. This is mostly because of the OpenCable standard, which may be on the verge of
being completed this year. OpenCable promotes that Cable companies would no longer be
responsible for buying and supplying cable customers with set-top boxes for the home.
Consumers would have to buy a cable box that could be used anywhere for any cable
system. This would save cable companies millions of dollars while eliminating the need for
consumers to "rent" the cable boxes. The OpenCable specification may be standardized by
1Q00.
"OpenCable allows an additional opportunity for companies to move in," said Ford. "This
opens barriers that may in the past been there for numerous companies. Because of this
there are a lot of opportunities for innovation in this area from new and current set-top
manufacturers."
This may also spawn numerous hybrid boxes from new and current companies that contain
a variety of value added including a DVD player, a hard disk drive, smart card or
PCMCIA access, WebTV technology or equivalent, HDTV boxes with multiple data
services, or a box that combines both cable and satellite requirements to receive both
programming.
Graphics Jump on
Most of the leading graphics accelerator vendors are already on the move with products of
their own that will be targeting the set-top box arena. The leading company is ATI
Technologies Inc. who has already garnered design wins for its Rage Pro set-top offering
from General Instruments.
"Most set-top manufacturers want to improve the 2-D technology and eventually the 3-D
technology to enable interactivity and Internet applications to be more feature rich. This
obviously gives the graphics guys an opportunity to cash in," said Abraham. She added that
while the graphics guys are making moves into the consumer space, other companies,
already involved in the set-top arena, are looking to improve the graphics in their own
chips.
ATI is not the only one, however, last week, S3 Inc. said it plans to enter the set-top
consumer market with a product of its own in the near future perhaps even before the end
of the year (EN, Feb. 1). Also, add-in board and graphics IC vendor Matrox Graphics Inc.
and newly public Nvidia Inc. could be the next graphics manufacturers to enter the digital
consumer market.
There are still a number of issues that regular set-top boxes manufacturers have to deliver.
For satellites, it's solving the local programming issue while continuing to add value such as
teaming with Internet companies and providing interactivity. For cable, it's passing the
OpenCable standard and delivering the set-tops on time at an affordable rate. For DTV,
the opportunity is endless but the costs and infrastructure still need to be worked out before
these high volumes can be attained |
