Cisco clarifies plans for low-margin STBs

US telecoms equipment maker Cisco has expanded on comments made by CEO John Chambers during last week’s earnings call, stating that it remains committed to customer premises equipment (CPE) as part of its overall video strategy, but plans to migrate away from the lower-margin side of the set-top box business.

Joe Chow, GM of Cisco's Connected Devices business

Joe Chow, GM of Cisco's Connected Devices business

Writing on the company blog (here), Joe Chow, Vice President and General Manager of Cisco’s Connected Devices Business Unit, comments: “Following Cisco’s 2Q FY ’13 earnings call last week, we received questions about our commitment to certain elements of our set-top box business. Comments were made that Cisco is walking away from low-margin deals. I would like to clear up any confusion surrounding those comments here.”

Chow goes on to say that Cisco remains committed to providing CPE equipment including digital set-tops, intelligent media gateways and other devices – but has made the decision to “walk away from lower margin set-top box opportunities where we are not delivering value as part of a more holistic video solution.”

This more holistic video solution is expected to include Cisco Videoscape, the company’s video delivery platform, as the company seeks to derive more value than that provided by low-margin/low-volume set-top box orders on their own.

“For the emerging markets that are launching and expanding their digital footprint, Cisco will continue to support strategic opportunities for traditional set-tops that will drive the growth of digital video,” concluded Chow. “Cisco has and will continue to evaluate each opportunity based on our business objectives. When warranted, Cisco will continue to support these opportunities as a step in the migration to a gateway/client and cloud-based solution.”