Arris’s IP Video Gateway Device Could Boost Sales Next Year, Company Says
The introduction next year of a video gateway device that marries cable video networking technology with Internet Protocol could provide a big boost to Arris’s sales, executives told investors late Wednesday after it reported Q3 financial results. “This is a big thing,” said Bruce McClelland, president of Arris’s broadband communications systems unit. “Every single operator out there is looking at multiple strategies on how to offer more interactive services, more advanced services, and more IP-based services,” he said. The devices have such great potential for growth because Arris has never sold anything like them before, said CEO Bob Stanzione. “This is something that starts from zero and grows from there."
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Initial feedback about the gateways from trade shows has been positive, Stanzione said. “More importantly … we've got several customers on the hook that want the product and are trying it out now in their labs,” he said. Within months, the devices will be in field trials and “we'll be ramping significant production there,” he said. “This represents a whole new game for us."
The devices could end up replacing set-top boxes in some cases, Stanzione said. They can provide similar functionality and new features such as whole-home DVR, at a price that’s lower than what operators spend on set-top boxes today, he said. “When you think about the kind of cap-ex that’s spent on this segment with set-tops … this is a big thing, not a small thing,” McClelland said.
Cable operators will take a variety of approaches as they offer new IP-based video services, Stanzione said. Some will rely on hybrid approaches that leverage their existing video networks, he said. Others are moving ahead with online streaming plans such as Comcast’s Xfinity TV, he said. Either way, operators will have to increase their spending to keep pace with growing competition from other online video distributors, he said. “I think they're going to have to spend more and I think they're going to participate in over-the-top video,” he said.
Home gateways will evolve over time to become more sophisticated, Stanzione said. That could include caching content in the gateway itself to avoid latency issues with IP Video, he said. “Those devices are becoming more advanced and we're seeing a much bigger shift toward advanced home networking, he said. Online video consumption should also drive demand for its cable modem terminations system equipment, which has been sluggish since Comcast completed its initial DOCSIS 3.0 deployments, Stanzione said. “I expect that over the next several months we're going to see the capacity they installed … be exhausted,” he said. The next round of upgrades may not meet the level of initial deployments, but it should be significant, he said.
Q3 sales at Arris were $274.3 million, slightly lower than a year earlier. Net income dropped 35 percent from a year earlier on a higher cost of sales.